The illicit wildlife trade is an international organized crime with significant financial flows. Generating criminal proceeds of USD 20 billion annually, it threatens biodiversity, fuels corruption and facilitates other serious offenses.
Even so, financial investigations of such transactions are rarely undertaken. Following the money can help regulated entities determine if there are reasonable grounds to suspect them.
Banks
Criminals attempting to bypass prosecution by engaging in illegal wildlife trade often employ various channels for laundering proceeds, including using formal financial institutions like banks. Unfortunately for law enforcement agencies, such criminals can use multiple bank accounts and currencies in order to hide their activity - however identifying suspicious monetary patterns can assist law enforcement agents in uncovering and dismantling wildlife crime networks.
Thus, it is crucial that researchers conduct investigations into the relationship between financial crimes and illegal wildlife trade, specifically financial institutions' roles in illegal wildlife product supply chains and compliance with national laws and international standards.
Cases such as Doc Antle in Malawi provide an example of how financial investigations can help dismantle criminal networks. Malawian authorities were able to trace and seize over 7,800 ivory tusks; this seizure serves as evidence that follow-the-money investigations can disrupt entire value chains associated with wildlife trafficking.
Institutional investors can play an essential role in encouraging Chinese and Vietnamese banks to take steps against illegal wildlife trade, by pressing them for zero tolerance commitments integrated into their anti-money laundering systems and processes. To support institutional investors' engagement with Chinese and Vietnamese banks, TRAFFIC has prepared a briefing specifically for institutional investors with guidance on engaging them effectively.
Shell companies
Shell companies have become an essential element in linking financial crimes and wildlife trafficking, particularly through "layering." These entities use anonymized names as the true owners, hiding behind "layering." Although shell companies appear legitimate - conducting legitimate business in fields like tourism and agriculture - many times they're used as fronts for illegal activities that hide and layer funds between different accounts.
As a result, wildlife traffickers can avoid detection by law enforcement and regulatory authorities. Furthermore, thanks to global financial markets and digital banking technology, funds can often be quickly moved through formal banking channels quickly, which makes their activities harder to detect by authorities investigating wildlife trafficking - particularly when proceeds cross borders.
Legal financial systems play an essential role in combatting wildlife crime; however, this alone will not suffice. To have real effect, governments and financial institutions must prosecute criminals and strengthen compliance programs while passing laws to make illegal wildlife trade a predicate offense for money laundering.
To address this problem, the global community must work collaboratively. This involves banks, government bodies, international organizations and multi-agency taskforces all cooperating together with countries sharing information on suspected suspicious activity and investigating wildlife crimes that originate outside their own borders.
Import-export industries
Illegal wildlife trafficking has long been associated with financial crimes like bribery, fraud, tax evasion and money laundering. This highly organized criminal activity involves multiple actors across jurisdictions. Criminals frequently employ shell and front companies to hide their activities as well as any illegal trade going on below them; alternatively they rely on informal money transfer systems like hawala or local services like Fei chen or Hundi to launder proceeds of illegal wildlife trade.
Criminals employ various front industries in order to evade detection of their illegal activities, including taxidermists, farms, breeding facilities, zoos and pet shops as cover. Nominees - usually family members or trusted associates - help the criminals funnel illegal proceeds away, pay costs associated with shipping cages short term accommodation and packaging as well as conceal beneficial ownership by acting as conduits of illicit trade profits or hide beneficial ownership.
Law enforcement and financial institutions often do not prioritize illegal wildlife trading as much as other forms of crime such as drugs or people smuggling, which limits law enforcement agencies' abilities to take effective action against those engaged in this form of offense and inhibit financial institutions' efforts in tracking down funds that flow into illegal wildlife trade operations. EIA aims to change this by identifying key criminal trends, typologies and red flags through case studies as well as engaging and supporting law enforcement partners globally.
Informal money value transfer systems
The illegal wildlife trade is a multi-billion dollar criminal enterprise conducted by highly organised criminal networks. Proceeds from wildlife crime are laundered through global financial systems, often violating laws and undermining institutions in the process. Crime syndicates utilize shell companies, import-export industries, pet shops, zoos and decor sectors as fronts to launder illicit proceeds; particularly vulnerable sectors include import/export industries with inadequate regulation and high levels of cross-border transactions that provide cover for illicit proceeds to flow back in.
Anti-money laundering laws place legal obligations on banks to verify customer identities, implement risk-based controls and monitor suspicious behaviors and anomalies; however, most Suspicious Transaction Reports (STRs) are not shared with law enforcement agencies of respective countries; consequently, little information on money laundering practices employed within illegal wildlife trade exists.
EIA is working to bridge this knowledge gap by collecting and disseminating actionable intelligence on financial crimes associated with illegal wildlife trade. This information is essential for banks and national law enforcement agencies (particularly Financial Intelligence Units ) in combatting this link between financial crimes and wildlife crime trade.
EIA has developed several typologies, detailed case analysis and red flags in order to assist banks and FIUs in detecting illegal wildlife trafficking activity. We also support the creation of a global network of experts on links between wildlife crime and the financial system - this network will assist in building capacity globally.
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