Anti-Money Laundering Compliance and Environmental Crimes

The Financial Action Task Force (FATF) has released a report detailing the role of shell companies and trade-based fraud to launder gains from environmental crimes. The report shows the need for anti-money laundering compliance authorities to build working relationships with environmental protection agencies, environmental crime investigators, and other professionals that may be considered non-traditional partners. Data from over 40 countries and international organizations was used to compile the report “Money Laundering from Environmental Crime“.

According to the report, environmental crime is estimated to be one of the most profitable criminal industries in the world. Although these crimes are generating up to 281 billion USD in criminal gains, government action and policies have been slow to react. Anti-money laundering compliance officials must work together with environmental crime officials to disrupt the flow of these proceeds and prevent further damage.

Despite the significant proceeds from environmental crime, anti-money laundering is not often discussed when public policy on environmental protections is addressed. Many jurisdictions view environmental protection as a conservation issue, not a financial one. Many of the criminals rely on trade-based fraud, corruption, and cross-border smuggling- which financial implications should be highly considered.

FATF has released some guidance for anti-money laundering compliance officials and governments to mitigate some of the damages caused by environmental crime. Including the need for countries to “consider establishing and strengthening public-private sector dialogue to share risk information, and organization or industry-led initiatives to strengthen due diligence of supply chains and their financial flows.”

AML screening has always been an important aspect of assessing risk, but it could also help prevent criminals from laundering their illegal gains from environmental crimes. Penalties for environmental crimes can be light, but by amending the penalties for financial crimes to charges – the penalties can become much more severe. Conservationists, anti-money laundering compliance officials, governments, and environmental protection agencies must all work in-tandem to help combat this threat.

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