Why nations must follow money from environmental crimes
The Independent Uganda
March 24, 2024
The Financial Action Task Force (FATF) – the global anti-money laundering
watchdog— estimates that environmental crime is one of the most profitable
criminal enterprises, generating around USD 110 to 281 billion in criminal
gains each year; however, its latest figures suggest that less than 1
percent of the profits are recovered.
Marilyne Pereira Goncalves, Senior Financial Sector Specialist with the
World Bank says this should worry us all.
She observes that every year, criminals make millions of dollars by
illegally harvesting and trafficking our planet’s natural resources. Their
crimes cover a wide range of activities, from illegal logging to poaching
and trafficking of endangered species, illegal mining, and waste
trafficking.
According to Goncalves, while the environmental crimes themselves often
occur in developing and resource-rich countries, criminals tend to move and
launder their profits globally.
“They often rely on a mix of front companies and corrupt actors to move
criminal profits undetected,” she notes Experts have found that
environmental crimes need to be found for our own survival. Uganda has not
been speared of crimes like illicit logging, poaching of wildlife like
elephant tusks and pangolin scales among others.
According to Wild Aid, in recent years, Uganda has fought hard to reduce
wildlife poaching within its borders and to reverse its reputation as a
hotspot for the smuggling and trafficking of illegal wildlife products to
Asia. All wild animal species are protected under Ugandan law and a new
wildlife act introduced in 2019 sets out extreme prison and monetary
penalties for wildlife crimes.
Goncalves says environmental crimes have huge human costs; indeed, the
survival of our planet could depend on how effectively we can tackle the
threat. “Yet, till now, these types of crimes have been given lesser
importance than other financial crimes, such as tax crimes or fraud,” she
said.
She observes that we spend millions of dollars on solutions for climate
change, but most countries spend next to nothing on recovering the proceeds
of climate-related crimes.
“This is important as following the money often helps identify and bring
down the wider networks and kingpins behind these crimes,” suggests
Goncalves In recent years, there has been increased attention on the global
need to follow the money from environmental crimes.
Part of those efforts resulted in the passing of the Uganda Wildlife Act in
2019. The significantly strengthening penalties for wildlife crime.
In 2022, Uganda handed down its first life sentence to an illegal ivory
dealer, in the famous Ochiba Pascal landmark case before The Standards,
Utilities, and Wildlife Court case.
The Court convicted Ochiba Pascal for unlawful possession of protected
species after being found in possession of two pieces of elephant ivory
weighing 9.55 kilograms without a wildlife use right.
This week, the European Union removed Uganda from the anti-money laundering
blacklist by the Financial Action Task Force (FATF). It said Uganda had
improved in Ati-money laundering nod Counter-terrorism. FATF also works in
fighting money laundering from environmental crimes and raises awareness
about the financial flows that fuel crimes such as illegal logging.
According to FATF’s former President, Marcus Pleyer, environmental crime is
one of the most profitable criminal enterprises. It covers a wide range of
unlawful activities such as illegal logging, illegal wildlife trade, and
waste trafficking.
“Neither crime nor finance are limited to national borders, so to achieve
our goals on tackling illicit finance we need to work with all countries,”
he said.
In February this year, FATF’s urged for the implementation of
recommendation 25 on the beneficial ownership and transparency of legal
arrangements in to enhance transparency of beneficial ownership globally
and prevent criminals and terrorists from hiding their activities and funds
behind complex corporate structures and legal arrangements such as trusts.
Beneficial owner refers to the natural person(s) who ultimately owns or
controls an entity and/or the natural person on whose behalf a transaction
is being conducted
Experts have found that environmental crimes are usually mixed with legal
activities to hide its illicit character. They say banks (Financial
Institutions) can play an important role here, as they are part of
international trade through provided services.
As an example, in 2022 the Basel Ant-Money Landering Index (AML) added
environmental crime data to its indicators of money laundering and
terrorist financing. This indicator had 5% weighting and is based on the
Global Organized Crime Index, measuring risks connected to environmental
crimes and first published in 2021.
In 2020 and 2021, the German and Chinese Presidencies to the FATF
prioritized this issue and developed two public reports for countries on
how to detect and investigate the laundering of money from environmental
crimes. Goncalves notes that while this was an important step, the topic
has since fallen out of the policy spotlight.
“The real challenge now is how to get countries to regain and maintain this
momentum and translate it into action on the ground,”
In August last year, WildAid said East Africa’s ports are on the frontline
in the fight against illegal wildlife trafficking. It said products from
all over Africa pass through the region on their way to Asia and other
destinations. It called on efforts to sensitize port workers about the
value of wildlife to their countries if they are to fight environmental
crime. Smuggled wildlife products are normally concealed in illegal
shipments.
What Needs to be Done?
For this to happen, there needs to be a coordinated effort from
governments, the FATF, and the public itself. Marilyne Pereira Goncalves
suggests that countries need to bring financial crime and anti-money
laundering expertise into public-policy dialogue on environmental
protection and climate change.
“In most countries, there has been very little coordination between
agencies responsible for money-laundering prevention and those responsible
for environmental protection,” she said.
According to Goncalves, case studies show that criminals involved in
environmental crimes often launder their profits in plain sight, using
legal markets to mix legal and criminal proceeds. And that criminals misuse
the same Anti-Money Laundering weaknesses as fraudsters or tax criminals,
who rely on gaps in information on ultimate owners behind companies and
weak international cooperation.
“This highlights the need for both developed and developing countries to
address long-standing gaps in their AML frameworks and ensure that AML
experts partner with a wider range of public and private sector partners to
detect anomalies,” she urged.
Goncalves further suggests that the public has an important role to play in
helping to ensure environmental crimes are treated seriously and that
criminals are sanctioned. This includes encouraging public sector efforts
to strengthen expertise in this area, and actions to follow and recover
criminal gains from such crimes.
https://www.independent.co.ug/why-nations-must-follow-money-from-environmental-crimes/