The formal banking sector is playing a key role moving and transferring financial flows associated with environmental crimes according a new report published by the Financial Action Task Force (FATF).
The report, Money Laundering from Environmental Crime, says consultations have shown that large financial institutions with a global presence will provide financial services in some regions to entities and individuals involved in forestry and mining.
Inconsistent financial flows
In the case of illegal logging and illegal mining, one of the common characteristics of financial flows is the significant movement of funds towards rural areas with cash based economies instead of into urban areas or financial centres.
This is inconsistent with financial flows associated with formal or foreign direct investment and the result of payments for labour and equipment associated with illegal logging and illegal mining.
Large financial institutions
This could result in financial flows from large financial institutions towards rurally integrated regional financial institutions, and onward through unregulated and regulated money value transfer services (MVTS) to compensate workers in the area, many of whom may not have registered bank accounts.
Funds may also be used to procure necessary equipment for extraction and transport out of rural zones.
Those labourers employed to undertake illegal logging or illegal mining are paid in cash, or they may elect to send the money to a family member or another third party through an MVTS network.
Categories: Trade Based Financial crimes News