Elephants, rhinos and tigers may not be the first thing that springs to mind when thinking about financial crime. Yet, organised illegal environmental activities are on the rise and increasingly used to generate illicit proceeds, which eventually find their way into the global economy. Sustainable development, livelihoods, good governance and the rule of law are all being threatened, as significant sums of money are flowing to militias and terrorist groups.
Our natural resources are finite and cannot be easily replenished. Preventing crimes which harm our environment are, therefore, an ongoing priority for all of us. Environmental crimes can broadly be defined as illegal acts which directly harm the environment. Typically they include: unlawful trade of wildlife, terrorism and kidnap, illegal fishing, illegitimate land conversion and the smuggling of ozone depleting substances (ODS). These acts all have a devastating impact on our planet and contribute to increasing levels of pollution, degradation of wildlife, reduction of biodiversity and the disturbance of our global ecological balance.
The past 10 years have seen environmental crimes increase by at least 5% to 7% per annum and they are now a global industry, estimated to generate circa US$250 billion a year. According to the United Nations, their scale is growing two to three times faster than global GDP, which – perhaps surprisingly – makes environmental crimes the fourth largest criminal area in the world, behind illegal drugs, and human and arms trafficking. The proceeds often go undetected and eventually end up in the world’s financial system, creating a huge risk for financial services businesses.
Frequently perceived as ‘victimless’ and low down on the priority list, environmental crimes pose a significant threat to our planet and deprive future generations of what we enjoy today. Despite their scale, they have historically failed to prompt an appropriate response from governments and enforcement. The reality of the matter is these crimes can generate huge profits for criminal enterprises. As they are always operationally changing, enforcement agencies have struggled to keep pace.
Such activities can generate huge revenues for organised criminals and due to their clandestine nature, they are generally cash-based and thus avoid conventional banking systems. Offenders are able to clean their funds by laundering the money through other equally illicit networks and forming strong links with criminal areas, through associations with organised crime. This makes it difficult to identify the total amount of money being laundered. Consequently, we find ourselves in a situation where environmental crimes offer participants high profits and minimal risk and where their concealed funds eventually flow into the world’s economy without being detected. As a result, any of us could come into contact with these monies without being aware.
The financial services sector is particularly vulnerable to the proceeds of environmental crimes. Firms – such as ours – need to be adequately equipped to be able to detect and prevent criminal activity, whilst doing their upmost to educate staff of their consequences. In June 2020, the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog – issued a comprehensive study into the money laundering aspects of the illegal trade in wildlife. It highlighted financial institutions should view these proceeds as a global threat. As a result, FATF have encouraged all jurisdictions to apply their international standards to prevent exposure to these crimes and to maintain a special focus on illegal financial flows to identify corruption.
At Affinity we see protecting the environment as a moral imperative, incorporated into our ethics and values. We are a participant and signatory of the UN Global Compact and have committed to undertake initiatives to promote greater environmental and social responsibility. Consistent with our Ethical Charter, our anti-corruption policies help to protect all stakeholders from individuals and organisations who may be linked with corruption or environmental crimes. Elephants, rhinos and tigers are very much part of our world.
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