FinCEN issues specific instructions to banks in response to upward trend in environmental crimes

Financial institutions in the US have been given specific suspicious activity report (SAR) filing instructions in a new notice issued by the US treasury’s Financial Crimes Enforcement Network (FinCEN) to pay more attention to an upward trend in environmental crimes and associated illicit financial activity.

FinCEN says it is highlighting this trend because of the strong links between corruption and transnational criminal organisations and environmental crimes and their impact on the climate crisis. Additional reporting by several entities will be needed.

FinCEN’s AML/CFT priorities

Environmental crimes’ strong association with corruption and transnational criminal organisations is a concern for FinCEN because they are two of the network’s national anti-money laundering and countering the financing of terrorism (AML/CFT) priorities.

The agency also sees a need to enhance reporting and analysis of illicit financial flows related to environmental crimes, which the agency says contribute to the climate crisis, including threatening ecosystems, decreasing biodiversity, and increasing carbon dioxide in the atmosphere.

Scope of environmental crimes

Environmental crimes encompass illegal activity that harms human health, and harms nature and natural resources by damaging environmental quality.

This can include driving biodiversity loss, causing the overexploitation of natural resources, and thereby increasing carbon dioxide levels in the atmosphere.

Financial institutions crucial

SAR filings by financial institutions are crucial to identifying and stopping environmental crimes related money laundering according to FinCEN.

Its new notice therefore provides financial institutions with specific SAR filing instructions and highlights the likelihood of illicit financial activity related to several types of environmental crimes.

Instructions for financial institutions

FinCEN is asking financial institutions to use specific keywords and clearly indicate any connection between the suspicious activity being reported and environmental crimes.

They should also make clear the suspicious activity they have identified, such as wildlife trafficking, illegal logging, illegal fishing, illegal mining, or waste trafficking.  If the suspicious activity involves multiple potential offences, FinCEN requests that financial institutions include all relevant keywords in their narratives.

Global challenge

The Financial Action Task Force (FATF) has estimated that global environmental crimes generate hundreds of billions of US dollars in illicit proceeds annually.

These crimes frequently and increasingly involve transnational organised crime and corruption, and are often associated with a variety of other crimes including money laundering, bribery, theft, forgery, tax evasion, fraud, human trafficking, and drug trafficking according to FATF.

FinCEN’s notice, FinCEN Calls Attention to Environmental Crimes and Related Financial Activity, can be found here.


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