The topic of money laundering often brings to mind common, more generalized themes related to financial crime such as fraud and embezzlement, narcotics, shell companies, and even organized crime and ties to terrorism. More recently however, criminals and politically exposed persons (PEPs) have turned their sights from more traditional methods of laundering to delve into other areas that have allowed them to more easily clean their illicit or unethical funds while avoiding detection. For example, the respective art and antiquities markets have gained notoriety in this respect in recent years, given that these objects are easy to hide and subsequently smuggle. This coupled with the fact that the vast majority of transactions involving lucrative artwork are of the private variety, with pricing mostly subjective (beauty is in the eye of the beholder after all) but generally highly valued has made the trade an attractive vehicle through which to launder ill-gotten gains. When thinking about illicit finance however, wildlife generally does not come to mind for most. However, a troubling trend involving the use of wildlife to launder money is on the rise both domestically and abroad with the power to not only impact the global financial system, but also endanger the very animal species at the center of these schemes.
The underground illegal wildlife trade is a form of organized crime that generates billions in illegal proceeds every year (with some estimating the illicit trade nets hundreds of billions of dollars collectively on an annual basis). In 2021, the trade – which encompasses the harvest and subsequent sales in live animals and plants as well as any parts or products that can be derived from them (i.e. skins, tusks, medications, etc.) – has evolved into an ever-popular means by which criminals and questionable enterprises can launder large amounts of funds relatively quickly. All told, the market is something of a dark underworld marked by poaching, abuse and slaughter of animals, backhanded dealings, and complex financial crime often masterminded by organized criminal groups. Career criminals have developed highly sophisticated networks to move their “products” utilizing complicit actors and shell companies, one of the top vehicles for laundering illicit funds and criminal proceeds in itself. Illegal wildlife trading fuels corruption, threatens biodiversity, and can have a significant negative impact on public health and the economy.3 Criminals utilize exotic animals to move, hide, and launder their illegal funds with little resistance because wildlife-related transgressions are rarely investigated and prosecuted outside of crimes such as poaching of threatened or endangered species. There are currently very few international laws specifically targeting money laundering through wildlife trade, which aids in the ability of bad actors to exploit these loopholes for personal gain.
The Financial Action Task Force (FATF) – an intergovernmental body developing policies to combat financial crime – recently published a special report on the topic of wildlife trafficking titled “Money Laundering and the Illegal Wildlife Trade.” The FATF notes that despite international authorities regularly seizing illegal wildlife and products, many countries continue to fail in conducting appropriate financial investigations in relation to said seizures to better identify the parties involved and limit the overall profitability of these crimes. The report adds that the “laundering of proceeds from wildlife crime generally involves activity to either conceal or disguise the source, movement and ownership of those funds” continuing, “due to the low number of financial investigations to date, both the private and public sector have a less developed knowledge of the trends, methods and techniques used to launder proceeds from IWT than for other major transnational crimes”3 which contributes to a response that is ineffective overall. This may change after the recent G7 summit however, as pressure is mounting on both lawmakers and financial institutions to crack down on wildlife trafficking. In a communique issued ahead of the summit, finance ministers and bank governors of the United States, United Kingdom, Canada, Japan, Italy, and France put the United Nations on alert to this global threat.
According to the United Nations, this multi-billion dollar industry is a growing problem that is becoming too big for governments around the world to simply ignore. The FATF has warned that the vast majority of global jurisdictions are still not sufficiently prioritizing efforts to put a stop to the financial flows involved in the illegal wildlife trade. Aside from the straight up sales of animals and plant species, criminals have also been able to utilize the trade networks of legitimate commodities to facilitate their ability to make profits. Unfortunately for the animal species, these commodities are most often derived from their carcasses – further destabilizing efforts to preserve the livelihood of certain species. Several of the most prominent recent cases involve seemingly legitimate companies acting as fronts for illegal African ivory trading operations – with larger transactions of this variety amounting to multiple millions of dollars per each individual sale. Scott Grob, the director of anti-money laundering at the Association of Certified Anti-Money Laundering Specialists (ACAMS) recently told trade finance media firm Global Trade Review that “the attention of the FATF has been a call to action within the financial industry”, noting that this is an important development because “with so much money involved in this activity, there will be financial footprints, and there will inevitably have been some trade element to it; you simply can’t run an operation of this size on cash alone.”1
Grob also says that criminals know that law enforcement is weak with respect to wildlife. It simply is not a priority and often is an underfunded branch of the authoritative system. Luckily some government agencies are beginning to shift their approach to better plug these loopholes of late. Europol, the top European policing agency, has taken a leadership role in this respect. Between November 2020 and June 2021, the agency undertook nearly 60,000 cargo inspections across Europe and made 52 arrests, seizing more than 400kg of eels valued at over €1 million.2 Cars, boats and other assets were also seized as part of this operation. Another sting operation championed by Europol along with the Spanish Civil Guard lead to the dismantling of a large organized crime group and the arrest of 21 suspects between the United Kingdom and Spain, with the group illegally trafficking various species of exotic reptile while also participating in other crimes including document fraud, smuggling and money laundering.4
Somewhat unsurprisingly, the largest hotbed for illegal wildlife trafficking is also a place rife with corruption of all kinds: West Africa. Not surprisingly, not a single country in the region has moved to investigate wildlife crimes on a significant level. Nigeria in particular is the go-to global hub for illegal ivory and pangolin (an exotic mammal resembling a scaled anteater) sales. The output of pangolin specifically has risen so dramatically that it is estimated their sales are now 5 times what they were 5 years ago. The region also accounts for 93% of all ivory that has been seized by authorities. Interestingly enough, 90% of those seizures were ships headed for China.1
While some of the top world powers have collectively begun to place emphasis on wildlife trafficking emerging as a notable vehicle through which financial crime can proliferate, clearly work remains to be done to stop the spread of illicit finance through the trade while protecting the integrity of the very wildlife species at the center of these lucrative ploys. Global financial institutions looking to avoid potential repercussions for holding accounts of individuals/organizations potentially involved in these schemes should pay particularly close attention to customers with any connections with the above-mentioned countries that have become synonymous with wildlife trafficking exploits. For more information on wildlife trafficking and other emerging vehicles of money laundering, please download out esteemed free eBook: The Art of Money Laundering.
- Basquill, John. “Wildlife Trafficking: a New Frontier for Organised Financial Crime.”Global Trade Review (GTR), 15 June 2021.
- “Eels Shipped in Air Cargo Found in Operation Lake V.”Sustainable Eel Group, 4 June 2021.
- “Money Laundering and the Illegal Wildlife Trade.” Financial Action Task Force, June 2020.
- “355 Protected Reptiles Saved in Spain in Hit against Wildlife Traffickers.”Europol, 1 Dec. 2020.