The US Needs to Get Serious About Eradicating Dirty Money behind Amazon Environmental Crimes
U.S. Financial Connections Implicated in Amazon Environmental Crimes: Study Reveals
The White House is facing criticisms for not doing enough to combat illegal activities threatening the Amazon’s precious ecosystems. A recent report by the Financial Accountability and Corporate Transparency (FACT) Coalition reveals that the US could do better in addressing the financial angle of environmental crimes in Amazon countries.
The report, based on 230 environmental crimes, uncovers how organized groups are committing illegal logging, mining, and wildlife trafficking, and laundering their profits. It further highlights that only one out of three cases involves a financial investigation. As a result, the big fish—those raking in the $281 billion yearly profits from this illicit economy—remain elusive.
The report, published last month, accuses prosecutors and investigators of failing to "follow the money" in environmental crime cases, creating a vicious cycle where such crimes are perceived as "low-risk, high-reward." This attracts more criminal groups into the fray.
Notably, the US, particularly financial institutions, is deeply involved. Dubai, Miami, and Panama have been identified as key facilitators for laundered funds. In fact, the US is both the most common foreign destination for illicitly-sourced natural resources and for the proceeds of their sale.
Shell and front companies are favored for laundering purposes due to the anonymity they offer and their veneer of legitimacy. Other money laundering methods include real estate transactions, bulk cash smuggling, front men, abuse of financial institutions, and trade-based money laundering.
FACT proposes a few solutions to break this cycle. They advise integrating financial investigations into environmental crime investigations and enforcement actions. Capacity building and technical assistance can be provided by the US government to help countries follow the money trail more effectively.
Moreover, the pervasive use of anonymous shell companies needs to be addressed. As part of this, countries in the region should intensify efforts regarding corporate ownership in line with the Financial Action Task Force’s (FATF) Recommendation 24. The US, as the most common foreign destination country for the proceeds of environmental crimes, must also make parallel progress on beneficial ownership.
In light of the report’s findings, the US should step up its engagement and leadership on issues of illicit finance and environmental crime in the Western Hemisphere. As FACT stated, “The US should work with partner countries to address the most common avenues of illicit finance that environmental criminals use to profit from the destruction of our ecosystems.”
The FACT report offers valuable insights into how to effectively combat environmental crimes in the Amazon region. By pursuing financial investigations, improving beneficial ownership transparency, and implementing anti-money laundering (AML) strategies, the US and its international partners can disrupt the financial network enabling large-scale ecological destruction and contribute to global environmental protection and security.
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Insights from Enrichment Data:
- Law enforcement agencies need to collaborate and share intelligence to track financial flows and physical operations of criminal networks involved in environmental crimes.
- Advanced tools can be used to trace transactions linked to Amazon-region commodities and entities.
- Strengthening corporate registration systems and creating interconnected registries can help law enforcement pierce the veil of shell companies used to launder money from environmental crimes.
- Governments should treat environmental crime proceeds as high-risk for money laundering.
- Financial institutions should conduct enhanced due diligence on transactions linked to Amazon-region commodities and entities.
- Policy coordination and harmonization at UN, G20, and other international forums can aid in combating environmental crime.
- Financing for deforestation and land conversion can be managed through programs like Themis, providing insights into financial crime risks and aiding structured financial investigations and AML compliance.
- The US should collaborate with other law enforcement agencies to share intelligence and track financial flows associated with environmental crimes in the Amazon region, as advanced tools can help trace transactions linked to Amazon-region commodities and entities.
- To combat environmental crimes more effectively, law enforcement agencies need to incorporate financial investigations into their environmental crime investigations and enforcement actions, similar to how they approach other forms of organized crime.
- Governments should prioritize strengthening their corporate registration systems and creating interconnected registries to help law enforcement pierce the veil of shell companies used for money laundering in relation to environmental crimes.
- Financial institutions should be vigilant and conduct enhanced due diligence on transactions linked to Amazon-region commodities and entities, as treating environmental crime proceeds as high-risk for money laundering can aid in combating these activities.
- Cooperation and policy harmonization at the UN, G20, and other international forums can assist countries in combating environmental crimes, with financing for deforestation and land conversion potentially being managed through programs like Themis, providing insights into financial crime risks and supporting structured financial investigations and AML compliance.
