Environmental crime, increasingly referred to as 'green crime', includes unlawful activities such as illegal forestry and logging, waste trafficking, illegal fishing, illegal mining, illegal land clearance and wildlife-related crimes - it generates significant revenues for organised crime groups (OCGs).
The recent report published by the Financial Action Task Force (FATF) on Money Laundering from Environmental Crime states that estimates range from "USD 110 to 281 billion in criminal gains each year" making it one of the world's most lucrative crimes and also warns that not enough is being done to detect and disrupt the resulting illicit financial flows. For example, less than half of the respondents in a country level survey conducted by FATF included environmental crimes in their national or sectorial money laundering risk assessment. Often perceived as a 'low risk - high reward' crime, it is frequently integrated with other criminal activities including the trafficking of humans and narcotics, smuggling and tax evasion, and corruption. Further, when illicit items derived from environmental crime are shipped with legitimate commodities, and less rigorous regulatory regimes are exploited, it can become even more difficult for investigators and compliance professionals to detect.
In addition to examining what steps governments should consider to help tackle the problem, the FATF report also suggested some measures that private sector companies could take and set out some specific guidance for financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) together with some examples of risk indicators in a number of areas including:
- Transaction and cash flows
- Economic activities
- Supply chain choke points
- Export & transfer pricing
- Economic activities
This is helpful as companies can use these 'red flags' as a starting point for developing their own library of risk indicators reflecting their specific business characteristics.
Financial institutions in particular are already required to monitor transactions to identify suspicious activity, however whilst some banks already apply targeted transaction monitoring models designed specifically to identify indicators of environmental crime, many don't. There is room for improvement.
If you need help in this area, please contact Neal Ysart, Lead Regulatory & Investigations Advisor at firstname.lastname@example.org / Tel: +971 55 138 9250 or your usual Clyde & Co point of contact.
Environmental crime – such as forestry crime, illegal mining and waste trafficking - is an extremely profitable criminal enterprise, generating billions in criminal gains each year. It fuels corruption, and converges with many other serious and organised crimes, such as tax fraud, drug trafficking and forced labour.