Money-laundering through the illegal wildlife trade

Get up close to a jaguar and you’ll notice they have long, sharp and intimidating canine teeth. When it comes to hunting prey in the South American jungle, these fangs are a blessing but because of the illegal wildlife trade, they are also a curse.

Across several South American countries, jaguars are regularly poached, not just for their teeth, which often end up as jewelry, but also for their claws and other body parts, mostly destined to become traditional medicine in Asia.

“Investigators found a highly secretive hunting and trading chain involving considerable cruelty,” says a recent investigation into jaguar poaching in Suriname by animal rights organisation World Animal Protection. “Jaguars may be tracked for hours or days, wounded or killed with multiple gunshots. They are killed mostly by local hunters who can sell them to mainly Chinese middlemen for around US$260 each. To a local hunter, a dead jaguar would have the cash value of 20g of gold, or represent the down-payment for a new car.”

The worldwide cost of poaching

When it comes to the illegal wildlife trade, jaguar poaching is just the tip of the iceberg.

All over the planet, from Asia to the Americas, from the jungles to the oceans, from the developing world to the developed world, there is a vast network of poachers, traffickers and consumers trading in largely endangered flora and fauna.

Certain species such as big cats, elephants, rhinos and pangolins regularly hit the headlines, while lesser-known reptiles, birds, amphibians, fish and plants fall beneath the radar. According to a United Nations report, criminals trade products derived from over 7,000 species.

Since this illegal trade is so secretive, it’s near impossible to measure its impact with any accuracy. However, Interpol and The United Nations Environment Programme estimates that proceeds range between $7 billion and $20 billion a year.

Illegal wildlife trading causes multiple harms. It threatens biodiversity, since many of the species are endangered; it impacts public health; fuels corruption; damages the lives of indigenous peoples; and spreads zoonotic diseases. One further effect is money laundering, as criminals partaking in illegal wildlife trading seek to disguise their ill-gotten profits.

Money-laundering methods in the illegal wildlife trade

The Financial Action Task Force (FATF) is an inter-governmental organisation that combats money laundering. In their 2020 report, entitled Money Laundering and the Illegal Wildlife Trade, the methods criminals employ to move and launder the proceeds from their crimes were revealed:

“Criminals are placing and layering funds through cash deposits (under the guise of loans or payments), e-banking platforms (eg. electronic payment services that are tied to a credit card or bank account), licensed money value-transfer systems, and third-party wire transfers through banks,” they write. “In order to conceal the sender and the receiver of the funds, and to avoid the country-specific threshold reporting by financial institutions, syndicates are relying on money mule accounts and low-value payments.”

The report explained how traffickers often use import-export shell companies and front companies in industries such as plastics, timber, frozen foods or artwork to disguise their activities. It also said that businesses such as “taxidermists, farms, breeding facilities, pet shops and zoos” are often involved. “Other industries that may be more vulnerable to misuse include traditional medicine, decor and jewelry, and fashion,” it added.

In Asia and the Americas, the FATF says legitimate pet shops and private zoos are often used in the illicit trade of exotic pets, particularly big cats. Methods include cash sales, creating false receipts for other expenses and depositing money through local money value-transfer systems, via colleagues at the zoo, for example.

Illegal pangolin trafficking is another lucrative area of trade. In 2018, Indonesian authorities uncovered a vast syndicate that had been trafficking pangolin scales worth around $9 million. The syndicate leaders, who owned a legitimate frozen fish company, used a network of intermediary bank accounts under false names to disguise payments.

Criminals also launder proceeds by buying luxury items, vehicles, artworks and property. One syndicate in South Africa, led by a former police officer, hunted rhinos primarily to sell their horns, before laundering the money by purchasing property and luxury vehicles to the value of around $1million.

Another investigation in Indonesia led to the arrest of a police officer who was caught transporting 70 armadillos. In an attempt to disguise his crime, he had spread dirty money among the bank accounts of family members before paying for cars, hotel stays and luxury clothes. He was eventually imprisoned for two years and fined $55,000.

report by the Global Initiative Against Transnational Organized Crime, published in September 2021, lifted the lid on wildlife crime in East Africa. Written by Amanda Gore, an accountant who combats environmental crime, it explained how criminal gangs engage in these crimes:

“Poaching and trafficking activities are often performed in groups, each with a distinct role in the criminal supply chain: from sourcing the product to organising transportation, financing and buyer liaison, and logistics and shipping. Transactions at the poaching site often involve cash payments or mobile-money transfers, with the equivalent of $20 being enough to poach an elephant. Being relatively small amounts, these payments can easily go undetected by anti-money laundering officials.”

Gore says that unregulated money-transfer services called hawala networks are often used to move money across national borders. “Mobile money and social media platforms such as WeChat, LINE and M-Pesa are also commonly used to move funds and facilitate communication,” she adds.

Why authorities need to act against the illegal wildlife trade

The FATF laments the fact that, despite the huge illegal profits earned by wildlife traffickers, very few national governments are addressing the financial implications of this type of criminal activity.

It’s a problem that has not gone unnoticed by the United Nations: the UN General Assembly has adopted several resolutions to combat the trade, and in September 2019 it reminded all its members “to amend national legislation so that offences connected to the illegal wildlife trade are treated as predicate offences for money laundering”.

For some species, mainstream media coverage will help protect them from poaching, and in turn, clamp down on subsequent money laundering. The poaching of South American jaguars and African elephants, and the plight of the totoaba fish, for example, have been the subjects of three recent documentaries, entitled The Ivory Game, Tigre Gente and Sea of Shadows respectively.

However, many lesser-known trafficked species of fauna and flora continue to be ignored by the mainstream media.

Rachel Nuwer is author of Poached: Inside the Dark World of Wildlife Trafficking. “I continue to be very concerned about lower profile species that are poached in the millions, yet that receive relatively little, if any, attention from law enforcement and policy makers and, in some cases, the global conservation community,” she told Napier. “Many people around the world have learned about the plight of pangolins, for example, through popular media stories. People don’t even know about or talk about other species – snakes, turtles, lizards, songbirds, marine species and much, much more.”

What does the future hold for illegal wildlife trading and money laundering?

It’s a similar message from Daan van Uhm, author of The Illegal Wildlife Trade: Inside the World of Poachers, Smugglers and Traders. He believes the general public is aware of how this illegal trade threatens endangered species. “I am positive because there is more attention from academics and from the media,” he told Napier. “But for some species there is limited attention.” He pointed to the sea cucumber, whose populations are declining massively as demand from China, where they are considered a delicacy, increases.

Nuwer stressed how important the Chinese government is in protecting all the above-mentioned species in the future. “My fear for the future is that as China’s influence (and immigration) around the world grows with the Belt and Road Initiative and increasing investment across Africa then, barring some major cultural shift, so too will the amount of poaching and trafficking of wildlife.”

Whether or not the Chinese authorities rein in the trade, there is another way to keep tabs on these activities, and that’s by curbing illegal money laundering using specially designed anti-money laundering software.

For further reading and recommendations on money laundering linked to environmental crime, see the FATF resource: Money Laundering from Environmental Crime for Public and Private Sectors.

Napier builds cutting-edge compliance technology to help companies in any sector comply with money laundering regulations, detect suspicious transactions, screen potential customer & business partners and help analysts predict customer behaviour.

Napier uses deep industry knowledge and cutting-edge technologies such as artificial intelligence and machine learning to help businesses detect suspicious behaviours and fight financial crime.

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