Criminals frequently use trade-based fraud and shell and front companies to launder proceeds from environmental crime according to a new report to be published today by the Financial Action Task Force (FATF).
At the end of its annual plenary session last week, the FATF announced its serious intention to sharpen its focus on environmental crime, and the report is expected to shed light on what actions the task force will instigate or encourage to tackle this type of criminality.
The report on environmental crime, which generates around US$110-280 billion in criminal gains each year, looks into a wide range of unlawful activities such as illegal logging, illegal wildlife trade and waste trafficking.
Criminals frequently use trade-based fraud and shell and front companies to launder proceeds from environmental crime and they often comingle legal and illegal goods early in the supply chain to make it harder to detect suspicious financial flows according to the report.
The report stresses the need for anti-money laundering authorities to collaborate with environmental crime investigators, environmental agencies and other non-traditional partners and foreign counterparts.
The FATF says there has been limited action by governments and the private sector to identify, investigate and prosecute laundering of proceeds from these crimes.
As a result, the report says environmental crimes have become “low risk, high reward” activities that provide a safe source of income for criminals, while causing devastating damage to the world’s ecosystem.
Building on FATF’s IWT work
Building on the FATF’s work on the illegal wildlife trade (IWT), this new report is expected to raise awareness about the scale and money laundering techniques of environmental crimes.
The FATF warned in January that it would crack down on money laundering linked with the illegal wildlife trade (Trade-based Financial Crime, 31 January 2020).
Increased international commitment
The new report underlines increasing commitment by international organisations to crack down on environmental crime.
In April a new web site was launched at an important set of meetings of the G20’s Anti-Corruption Working Group (ACWG) which also promoted a joint G20 ACWG-FATF meeting.
The website stores the G20’s anti-corruption resources, many of which focus on matters relevant to trade-based financial crime, including publications on beneficial ownership, money laundering and the integrity of customs operations.
Some resources focus on environmental sectors, including the extractive industries and illegal wildlife trade (Trade-based Financial Crime, 12 April 2021).
The FATF report, Money Laundering from Environmental Crime, can be found here.
Categories: Trade Based Financial crimes News