The Financial Action Task Force (FATF) published a report on "Money Laundering from Environmental Crime" on June 28, 2021. Many environmental crimes such as forestry crime, illegal mining and waste trafficking are included in the topics of this report. The report not only explains the ways in which money laundering is made from these crimes, but also explains how the government should follow in order to prevent money laundering in such crimes.
Environmental Crimes and Money Laundering
Money laundering in this way has become a very lucrative move, as sanctions on environmental crimes are not sufficient in many countries. FATF defined these crimes as "low risk, high reward" crimes. Some sectors, such as mining, are well suited to exploiting the vulnerabilities of international financial systems. The FATF said “The private sector also has an important role in detecting financial flows from environmental crimes. The FATF’s study identifies good practices and risk indicators to help financial and non-financial sectors detect potential cases.” in the report's release to highlight the role of the private sector in such transactions.
According to the data in the report, environmental crimes generate between $110 and $281 billion in criminal penalties each year. The 3 sectors on which the studies in the report focused on:
Illegal Mining: It covers mining activities without government permission. It is quite easy to make the revenues generated by this method appear legal thanks to money laundering.
Forestry Crime: It is the term that covers all the transactions made without the permission of the state in the forestry sector. All steps from cleaning to logistics are examined.
Waste Trafficking: It includes the illegal export of hazardous or electronic wastes.
According to the Money Laundering from Environmental Crime Report, although there is no single solution for all these sectors, 2 generalized steps are given for each country. According to the report, countries should do 2 things firstly:
1- All countries with and without domestic natural resources should consider the risks in such sectors for their own safety.
2-Countries should increase cooperation between financial investigators and environmental crime agencies to share information and expedite investigations.
These priority steps are very important for the identification of potential risks/incidents and the analysis of subsequent actions.
Environmental Crimes and Countries
The report includes all relevant analyses, case studies, definitions and necessary information. Looking at these case studies shows how much environmental crime-based money laundering actually takes place. For the analysis, a questionnaire from 45 countries was distributed. Countries mentioned in case studies: Argentina, Brazil, the People’s Republic of China, Costa-Rica, Finland, Germany, Indonesia, Ireland, Italy, Madagascar, Netherlands, Norway, Peru, Singapore, South Africa, Turkey, United Kingdom, United States and Zimbabwe. The questionnaire has titles such as: Country perceptions of risk, national laws and powers for money laundering and environmental crimes, asset recovery and international cooperation.
Moreover, according to the FATF's statement, it was stated that the new report was prepared based on “Money Laundering and the Illegal Wildlife Trade”report. According to the statement, FATF will intensify its research on environmental crimes and will hold a webinar on this issue in September 2021.