News
FATF Issues Report on Money Laundering Linked to Environmental Crime
29 Jun 2021

The Financial Action Task Force (FATF) on Monday published a report on the money-laundering risks associated with illegal mining, illicit logging, waste trafficking and other environmental crimes.

The report, which calls on FATF member-states to step up their efforts to identify environmental crimes and related illicit proceeds, follows on recent workshops and virtual consultations hosted by the intergovernmental organization, as well as a member-wide questionnaire that received input from 45 nations. National efforts to detect and disrupt the illicit money flows stemming from environmental crimes “have not been proportionate to the scale of this issue,” the report concluded.

While the size and sophistication of forestry crime, illegal mining and waste trafficking can vary from individual criminals or companies to large-scale criminal enterprises, few nations have assessed their potential exposure to global environmental supply chains, FATF said. Most of the proceeds derived from illegal mining and logging in particular are believed to be laundered through the international financial system.

“Estimates of the scale of financial flows from environmental crimes vary considerably but evidence suggests that proceeds account for hundreds of billions of dollars annually impacting all regions,” FATF said in the report. “With the exception of waste trafficking, environmental crimes generally occur in resource-rich developing and middle-income countries, with proceeds coming from larger, developed economies.”

What’s more, criminal networks often operate in multiple jurisdictions, with sourcing, transportation, sales and financial services each occurring in separate countries, and often though the exploitation of front and shell companies.

“Due to the irregular financial flows associated with environmental crimes, regional financial centres located in all regions of the world seem to play an important role in making funds available for these illicit activities as well as laundering the proceeds from these crimes,” FATF said. “They may also act as trade intermediaries to facilitate co-mingling, especially for mining goods.”

The report separately outlines case studies and red flags associated with the crimes.

Read FATF’s “Money Laundering from Environmental Crime” report here

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet