Co-mingling illegally obtained wildlife product with other commodities such as sugar, maize or fuel is one of several ways criminals are disguising their activities in the illegal wildlife trade (IWT) in South Africa according to a new report.
Financial Flows associated with Illegal Wildlife Trade in South Africa contains a significant amount of original research, including a survey of the country’s banks and money remitters to gain insight into their understanding of IWT and identify the extent to which their existing anti-money laundering control frameworks have been adapted to detect and mitigate IWT risks.
Wildlife criminals rely on complex routes to avoid detection and use a variety of concealment and smuggling techniques, including trade-based money laundering (TBML).
Sophisticated methods of payment and laundering are used higher up in the supply chain, for example by wildlife wholesalers and exporters. At the lower level, the likes of poachers or brokers tend to either use barter trades or are paid in cash according to the report published by the South African Anti-money Laundering Integrated Task Force (Samlit).
“It is not uncommon for the money flows associated with IWT to be linked to other crimes, such as fraudulent documentation or paperwork, TBML including over—, under—, or fictitious invoicing, as well as corruption to facilitate the inflow of funds into South Africa,” the report says.
Often, a network of front companies is created, and accounts established with local banks to move money via the formal banking system. These funds are disguised as legitimate income from the front company’s activities or sometimes TBML is used.
One example featured trade in marine products to mask ivory shipments, used by a Chinese ivory smuggling group operating out of Tanzania. Locally registered companies held accounts at two different banks in both US dollars and Tanzanian shillings.
In other instances, illicit shell trading companies were used to receive incoming funds or money mules were used to accept deposits and move across borders with bank cards.
Financial institutions surveyed
The data collected from 22 banks and money remitters in South Africa for the report aimed to provide insight into their understanding of IWT, associated financial crimes and the responses deployed by these institutions to combat IWT.
The report says it was “reassuring” that 50 per cent of the surveyed entities stated that they have prioritised the combatting of financial flows associated with IWT.
But 86 per cent of financial institutions did not have a specific system in place to detect this type of criminality. Bespoke IWT risk assessments had not been undertaken by 73 per cent of financial institutions while 59 per cent have not performed IWT—related awareness training.
Samlit’s report, Financial Flows associated with Illegal Wildlife Trade in South Africa, can be found here.
Categories: Trade Based Financial crimes News