Money Laundering and The Illegal Wildlife Trade (IWT)

The illegal wildlife trade (IWT) is a growing threat to biodiversity. This trade is becoming one of the most valuable illegal trade sectors. IWT threatens biodiversity and can have a negative impact on the economy. Hiding or laundering IWT revenues undermines financial integrity. Financial criminals facilitate money laundering activities by making billions of dollars of illegal trade in rhino horns, ivory, and other similar wildlife products.


It has published a global report on IWT for the first time by assessing the aspects of money laundering (ML) of Financial Action Task Force (FATF) wildlife crimes and how judicial districts should apply FATF standards to combat IWT.


Illegal Wildlife Trade (IWT) Relationship With Money Laundering


FATF released the June 2020 Money Laundering and the Illegal Wildlife Trade report. The FATF report aims to provide guidance on measures that can be taken to combat money laundering from the Illegal Wildlife Trade. The Illegal wildlife trade (IWT) is a major organized crime that fuels corruption and threatens biodiversity. According to the 2016 UN World Wildlife Crime report, criminals trade products derived from more than 7,000 wild animal and plant species worldwide. Criminals illegally trade iconic mammals and less well-known species such as birds, amphibian species, corals, reptiles, and bony fish. A striking example is illegally hunting criminals to make bags and shoes from the skin of pythons, consume them as food, and be used as a traditional medical tool.


FATF defines illegal wildlife trade as a "global threat," which is also linked to other organized crime such as drug trafficking and arms trade. Criminals abuse the official financial industry to hide illegal revenues from wildlife crimes and money laundering. According to the report, an estimated 7 billion to 23 billion dollars of illegal wildlife trade takes place annually. Although making a profit from illegal wildlife trade is one of the most effective ways of money laundering, there is a deficiency in monitoring the financial flows of wildlife smugglers. This means that countries rarely focused on the financial aspect of this crime. Therefore, the criminals continued to expand their activities in this area.


Methods Used for The Illegal Wildlife Trade


All criminals in IWT often use shells and front companies to hide payments and launder the revenues of their illegal activities. They primarily use shell companies to facilitate the transfer of value among the union members of the criminals, between buyers and sellers, or to hold assets. In addition, criminals often use legitimate frontline companies to hide the transfer of value from IWT. On the other hand, criminals use the import-export industries to demonstrate the movement of goods and payments across borders legally. Some of the vulnerable sectors that criminals use to clear your income are breeding facilities, pet shops, zoos, the decor, and the fashion industry.


To explain their process, Illegal funds obtained are transferred to third parties via bank transfers through e-banking platforms, loans or payments, licensed money transfer systems, and banks. Third-party accounts also often use innocent bank mules. Their illegal transactions are not noticeable, and thus money laundering takes place. Furthermore, with the development of online markets and mobile, social media-based payments, The Illegal Wildlife Trading has increased.


Cooperation in Financial Crimes Related to The Illegal Wildlife Trade


According to the FATF Recommendation, all jurisdictions require that Illegal Wildlife Trade identify, assess, and take action to reduce the risks of money laundering and terrorist financing. Moreover, As stated in the FATF report, if criminal offenses related to money laundering caused by Illegal Wildlife Trade abroad occurred in another country, this should definitely constitute a crime. As a result, wildlife crime committed abroad as a basis for money laundering should be not only able to provide international Cooperation in cases where double criminality is required but also through domestic investigations and prosecutions.


On the other side, Cooperation between the public and private sectors is important for identifying and disrupting IWT related financial flows. Especially in jurisdictions with public-private partnerships, there has been an interaction between the public sector and financial institutions in the monitoring of crimes related to IWT. Collaborations include both strategic and operational information exchange. As a result of the FATF survey, most of the countries' Cooperation in combating IWT-related financial crimes is realized within the financial sector and, to a lesser extent, among non-financial sectors.


FATF Recommendations in Combating IWT


To Anti-Money Laundering (AML) and Illegal Wildlife Trade (IWT), both high-level political commitment and improved operational Cooperation are needed. It is very important to work closely with sectors that play a role in combating money laundering with law enforcement officers responsible for wildlife crime. Studies can improve countries and private sector activities. The role of FATF Standards is very important in combating illegal wildlife trade.


Understanding of IWT's threats to non-financial businesses, different geographic country risk profiles for different species, and asset management practices related to illegal wildlife trade are required. FATF encourages strengthening money laundering risk understandings related to such crimes through comprehensive risk assessments and sharing the results of these efforts with all relevant authorities.



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