Illegal wildlife trade is a billion-dollar industry. According to the World Economic Forum, it is the fourth most lucrative global crime after drugs, human, and arms trafficking. From ivory to rhino horns, pangolin scales and tiger bones, these animal products are used for medicinal purposes, to display wealth and in some instances, consumed for (supposed) nourishment, it is a crime sector that mostly consists of commodities. “Essentially, the supply, transport and subsequent use of these illegal items has contributed to an industry estimated by the UN to be in excess of $20 billion,” says Jonny Bell, Director of Financial Crime Compliance and Payments, LexisNexis Risk Solutions. “The IWT industry is, like any other industry, ultimately driven by the consumers, so if there’s demand out there, then IWT will remain a prominent illicit predicate crime.
When you consider the profit potential alongside the fact that the risks of being caught and prosecuted are low, illegal wildlife trafficking becomes an attractive option for criminals. “There are pretty weak laws and enforcement around this,” adds Howard Presland, head of market planning and financial crime for UK & I and EMEA at LexisNexis Risk Solutions. “There are plenty of loopholes that can be exploited by wildlife traffickers and money launderers”.
Unfortunately for financial industries, their involvement in the illegal wildlife trade is complex. Bad actors and criminals use the financial system globally to transact and transfer the proceeds of crime. “And illegal wildlife isn’t an exception to this,” adds Bell. “Criminals will use financial institutions and the financial system to launder the proceeds of these illicit activities.” At the same time, financial institutions, regulators, and various governments around the world have placed focus on preventing this abuse, attempting to override the loopholes in the regulatory landscape that criminals are able to circumvent. “And also, the loopholes in financial institutions, processes, policies and technology – the financial institutions are inextricably linked, although unintentionally,” says Bell.
Financial institutions, therefore, have a vital role in preventing and dismantling illegal wildlife trade. “They need to ensure they have the correct processes in place, to ensure that they have the correct technology, software and data. They need to follow the money and help dismantle whatever criminal networks are using or exploiting those financial institutions,” adds Bell, who explains that it is important to not just focus solely on financial institutions. “If you look at the global supply chain in illegal wildlife trade, it goes far beyond financial institutions. You bring in transport companies, trade companies, corporates, and governments - they all have a significant role to play in combating and dismantling illegal wildlife trade.”
Even though financial institutions can unknowingly become involved in illegal wildlife trade, this is a situation that Bell is hoping is happening less and less due to emerging regulations and new measures being put in place. In severe cases, employees could face prison sentences even if they are unknowingly involved in illicit activity within the illegal wildlife trade. “In addition to the legal risks and regulatory risks, the reputational risks nowadays are important in terms of damage to the brand, loss of business and loss of trust,” adds Presland. “A financial institution’s impact is across the board – it is not just a point in time. It’s about how you onboard a customer or company effectively, how you detect and report suspicious transactions that may be related to wildlife trade and also to ensure that there are robust due diligence checks on those customers and transactions. Any suspicious activity must be reported to the relevant authorities.”
Regardless of the crime, money laundering is central to any criminal network. Criminals exploit the world's global financial institutions or regional financial institutions to profit and make money flow through the various supply chains to support the continuation of illegal wildlife trade. “Given the transnational nature of money laundering and the associated illegal wildlife trade, there is a requirement for regulations and laws to transcend national borders,” Bell says. “If you look across the global regulatory landscape, you will find that there are some jurisdictions and some countries that don't necessarily have appropriate regulations and enforcements in place. So, the risk-reward for illegal wildlife trade. is in some instances worth the risk for the criminal.
While appropriate due diligence measures are something firms can do to ensure they are not being exploited, Bell believes that no compliance or financial crime programme will be effective without comprehensive and harmonised policies, processes software and data. Collaboration with law enforcement agencies needs to go beyond Europol or Interpol. “There's a requirement for financial institutions to coordinate with multiple agencies, be they law enforcement or governmental bodies, private and public companies,” says Bell. “Effective network and data sharing are a necessity when it comes to the effectiveness of dismantling organised crime.”
One success Bell mentions is United for Wildlife (UfW), a charity set up by The Royal Foundation aimed at bringing together organisations from across the world to help in the eradication of illegal wildlife trade. UfW has created a network of hundreds of financial institutions, transport companies, law enforcement agencies and multiple other partners (including LexisNexis Risk Solutions) to tackle illegal wildlife trade and since inception, has contributed to more than 250 arrests and 450 law enforcement cases against wildlife trafficking and money laundering activities. “Now that wouldn’t have happened without the explicit collaboration between financial institutions and all those different providers and companies,” says Bell.
Share