FATF Report on Money Laundering and the Illegal Wildlife Trade

In June 2020, the Financial Action Task Force (FATF) released its first global report on the illegal wildlife trade. FATF was established by the G-7 Summit that was held in Paris in 1989 in response to mounting concern over money laundering. Recognizing the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries. 

 

The highlights of the FATF Report were:

·      The illegal wildlife trade (IWT) is a major transnational organized crime, which generates billions of criminal proceeds each year. IWT fuels corruption, threatens biodiversity, and can have a significant negative impact on public health and the economy.

·      To move, hide and launder their proceeds, wildlife traffickers exploit weaknesses in the financial and non-financial sectors, enabling further wildlife crimes and damaging financial integrity. Despite this, jurisdictions rarely investigate the financial trail left by this crime.

·      Jurisdictions should view the proceeds generated by IWT as a global threat, rather than as a problem only for those jurisdictions where wildlife is illegally harvested, transited, or sold. In particular, criminals are frequently misusing the legitimate wildlife trade, as well as other import-export type businesses, as a front to move and hide illegal proceeds from wildlife crimes. They also rely regularly on corruption, complex fraud and tax evasion.

·      There is a growing role for online marketplaces and mobile and social media-based payments to facilitate movement of proceeds from wildlife crimes. These trends highlight the increasing importance of a coordinated response from public authorities, the private sector and civil society to identify and disrupt financial flows from IWT.

·      Despite IWT’s global impact, public and private sectors in many jurisdictions have to date not prioritized combatting the financial flows connected to IWT in line with risk. Jurisdictions often do not have the knowledge, legislative basis, and resources required to assess and combat the threat posed by these funds. This limited focus on the financial side of IWT has largely prevented jurisdictions from being able to identify and sanction IWT networks.

·      To address the challenges, jurisdictions should consider implementing the following good practices that were observed during the study:

o   Prioritize combatting the financial flows associated with IWT proportionate to risk.

o   Provide all relevant agencies with the necessary mandate and tools to conduct successful financial investigations into IWT.

o   Improve co-ordination between authorities responsible for combatting wildlife crimes and those responsible for conducting financial investigations to ensure authorities more regularly exchange information and follow the financial trail.

o   Cooperate with other jurisdictions, relevant international organizations and the private sector to combat IWT.

·      There is a need to further improve the FATF Global Network’s collective understanding of the risk relating to IWT, including work on the role of non-financial entities in combatting IWT financial flows, greater understanding of the differing geographic supply chains, and good practices to address unique challenges in managing assets recovered during wildlife crime investigations.

·      It is essential that jurisdictions maintain their focus on IWT financial flows to achieve meaningful progress in addressing the challenges identified in the Report.