New analysis published 18 March that claims to expose the financial underbelly of global wildlife crime specifically contemplates the role trade-based money laundering (TBML) and trade-based value exchange plays in the illegal trade in natural resources.
The report by TRAFFIC, a non-governmental organisation working globally on trade in wild animals and plants, provides a thorough examination of the financial data from more than 40 wildlife crime cases from across the globe, including 11 detailed case studies.
Case Digest- An Initial Analysis of the Financial Flows and Payment Mechanisms Behind Wildlife and Forest Crime is a product of years of collaboration between participating government agencies, financial intelligence units, non-governmental organisations and other sector experts.
TRAFFIC, together with its main partner, UNODC, identified examples where financial investigations were conducted to analyse and build out specific patterns, trends and recommendations for practitioners.
The report also includes specific red flag indicators, criminal network diagrams, identified corruption vulnerabilities, lists of associated high-risk entities, and data on convergence between wildlife and other crimes.
The report contemplates six payment mechanisms commonly used in wildlife and forest crime: regulated banking and money or value transfer services; unregulated money or value transfer services; TBML; tax evasion, tax avoidance and tax fraud; mobile and internet-based payments, and other payments including value-transfer.
Case examples illustrate how sophisticated financial mechanisms are being used by wildlife traffickers and aim to help investigative units and other stakeholders to more strategically target their resources and intelligence systems to disrupt illicit trade.
While none of the case studies are specifically categorised as TBML operations, one trade-based value-transfer case illustrates the use of barter trade and other transactions to ensure that the authorities were limited in their ability to detect financial flows associated with the trade in illegal goods.
The case illustrates a complex financing barter trade scheme whereby drugs were received from Asia and sold for cash in South Africa and the profits were re-invested in purchasing abalone, a marine mollusc and a highly sought-after high-value seafood delicacy, to send back to Asian markets in a trade-based value exchange.
Case study scope
Nine nationals from South Africa who held various roles in the organised criminal group, along with two nationals from China who processed the abalone operated a scheme that made extensive use of cash payments and cash intensive businesses to facilitate and obscure illegal trade in abalone.
The case study also showcases legal and illegal means to conceal the true ownership behind vehicles and properties used to commit the crimes.
Recommendations for financial institutions
According to the report financial institutions could identify this type of case by evaluating the patterns of cash flow for small businesses and the reasonableness of cash inflows and outflows based on the location and industry of the business.
Other suspicious circumstances may include instances when clients declare that they are unemployed in the customer due diligence process but accumulate expensive assets or have higher financial flows than average.
TRAFFIC’s report, Case Digest- An Initial Analysis of the Financial Flows and Payment Mechanisms Behind Wildlife and Forest Crime, can be found here.
Categories: Trade Based Financial crimes News