In its first global report on the illegal wildlife trade, the Financial Action Task Force (FATF) has described it as a “global threat”, which also has links with other organised crimes like modern slavery, drug trafficking and arms trade.
The illegal trade is estimated to generate revenues of up to $23 billion a year. The report says financial probe is key to dismantling the syndicates involved, which can in turn significantly impact the associated criminal activities
Findings of the study, which expressed concern over the lack of focus on the financial aspects of the crime, are based on inputs from about 50 jurisdictions across the FATF global network, as well as expertise from the private sector and civil society.
Complex fraud and tax evasion
The “Money Laundering and the Illegal Wildlife Trade” report said “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”.
The study has highlighted the growing role of online marketplaces and mobile and social media-based payments to facilitate movement of proceeds warranting a coordinated response from government bodies, the private sector and the civil society.
The FATF found that jurisdictions often did not have the required knowledge, legislative basis and resources to assess and combat the threat posed by the funds generated through the illegal trade.
The report recommended that jurisdictions should consider implementing the good practices, as observed during the study. They include providing all relevant agencies with the necessary mandate and tools; and cooperating with other jurisdictions, international bodies and the private sector.
The FATF said legislative changes were necessary to increase the applicability of anti-money laundering laws to the illegal wildlife trade-linked offences.
The report noted that in 2012, India amended the Prevention of Money Laundering Act removing a value threshold — of ₹30 lakh and above — that was earlier applicable to the wildlife trade predicates.
During the study, 22 of the 45 respondent countries considered themselves as source for wildlife crime, 18 as transit countries and 14 as destination countries. All but nine reported to be impacted by the risks from financial flows linked to the trade, with the majority of exceptions being European countries.
According to the report, criminal syndicates are misusing formal financial sector to launder the proceeds. Funds are laundered through cash deposits, under the guise of loans or payments, e-banking platforms, licensed money value transfer systems, and third-party wire transfers via banks. Accounts of innocent victims are also used and high-value payments avoided to evade detection.
Misuse of front companies
Front companies, often linked to import-export industries, and shell firms are used for the movement of goods and trans-border money transfers. Another common trend is the misuse of front companies with links to the legal wildlife trade, said the report.
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“Other industries that may be more vulnerable to misuse include traditional medicine, décor and jewellery and fashion,” it said. Respondent countries said the criminals were also buying high-value goods, such as real estate and luxury items, to launder the proceeds.
According to the 2016 UN World Wildlife Crime report, criminals are illegally trading products derived from over 7,000 species of wild animals and plants across the world.