The Financial Action Task Force (FATF) has published a report on money laundering through environmental crime. Environmental crime includes forestry crime, illegal mining and waste trafficking. The FATF calls it a ‘low risk, high reward’ crime because the majority of the countries do not have stringent sanctions for environmental crimes. Financial criminals thus find this to be an attractive arena. As such, environmental crime generates billions in illicit profits every year. These illicit gains in turn drive corruption, drug trafficking, tax fraud, forced labour, etc.
The FATF report discusses the ways in which financial criminals launder their proceeds from environmental crime. It highlights that those involved in environmental crime engage in corruption, trade-based fraud, and offshore corporate structures to hide the beneficiaries of these crimes. The report also discusses how the public and private sectors can identify and disrupt this crime.
The FATF advises that all countries perform an assessment of the risk of financial criminals using their institutions to launder illicit gains from environmental crimes. Importantly, such an assessment should not be limited to only countries that possess abundant natural resources. The FATF also emphasizes the need for international, inter-agency cooperation and information sharing between various authorities to identify and prosecute the perpetrators of environmental crimes. The report further states that the private sector can also help in identifying the financial flows emanating from environmental crimes. The FATF will even hold a public webinar in September 2021 to discuss this and other issues around environmental crime with non-government stakeholders.
Source: FATF