Esha Roy, The New Indian Express | June 26, 2020
The Financial Action Task Force (FATF) released its first-ever report on illegal wildlife trade (IWT) on Thursday. FATF is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction.
The report comes amid increasing international concern that the crime could lead to more zoonotic diseases in the future. Estimating the proceeds of IWT to be between $7 and $23 billion per year globally, the FATF has suggested to all member governments that the financial aspect of wildlife trade needs to be looked at more carefully, and that money laundering laws should be applied to wildlife trade since the proceeds enters the global market through money laundering.
“The illegal wildlife trade is devastating our wildlife and putting the global ecosystem at risk. Time is running out. To ensure the survival of endangered species, we need to build strong public-private partnerships to prevent, detect and disrupt this activity, following the money that fuels it and the organised crime gangs, poachers and traffickers behind it,” said FATF president Xiangmin Liu.
“The illegal wildlife trade (IWT) is a major transnational organised crime that fuels corruption, threats biodiversity, and can have significant public health impacts. In particular, the spread in recent years of zoonotic diseases underlines the importance of ensuring that wildlife is traded in a legal, safe and sustainable manner, and that countries remove the profitability of illegal markets,” states the report.
In its report, the FATF pointed out that following the money allows countries to identify a wider network of syndicate leaders and financiers involved, and to reduce the profitability of the crime. It also stated that syndicates invovled in the crime are usually engaged in other illegal enterprises, and that tackling IWT will help dismantle such networks.
“Combating criminal organisations through their financial flows is a significant legal and investigative tool to prevent wildlife trafficking and the potential proliferation of zoonotic diseases,” it stated, suggesting the use of money laundering offences since they carry more severe penalties in many countries.
While the exact connection between the trading of pangolins and pangolin scales to the Covid-19 outbreak is yet to be established, researchers across the globe are looking into possible ties.
“While hunters can receive from USD 2.5 to 9 per kg of pangolin scales, the price in demand countries is usually around USD 200 per kg, but has reached as much as USD 700 per kg (between 100% to 600% mark-up). Between 2016 and 2019, countries confiscated an estimated 206.4 tonnes of pangolin scales across 52 seizures globally, which amounts to USD 41-144 million in sales in destination countries,” read the report.
India has also been a source country for illegal pangolin trading.
Talking about the extravagant mark-ups of illegal wildlife trade, the report points out that the price of rhinoceros horn can reach about $65,000 per kg, but has also been known to be as low as $9,000 per kg, according to US authorities. Criminals trafficked approximately 4,500 African rhinoceros horns between 2016 and 2017, generating estimated proceeds of between $79 and 292 million.
While the price paid to elephant poachers can be just $200 or less, in destination markets ivory can be priced at between $500 and $1,000 per kg (150 per cent to 400 per cent mark-up).
Syndicates involved in wildlife crime usually poach, harvest or breed wildlife in countries that are rich in biodiversity and/or where there may be weaker law enforcement oversight and criminal justice — or in source countries. Similarly, most syndicates involved in such crime transit the wildlife through other countries to obfuscate the end destination. Transit countries typically include trade and transport hubs or countries with higher levels of corruption. The laundering of the proceeds occurs across source, transit and destination countries.
“To hide the real country of origin, criminals involved in IWT often divert containers or shipments through third countries, and switch the bills of lading or vessel. For the sale of the illegal wildlife, jurisdictions identified common use of cash, mobile or social media-based payments, and third party payments,” says the report.
Countries highlighted that criminals are relying on “established” methods to launder proceeds from IWT, including the placement and layering of funds through the formal financial sector. In particular, countries reported that criminals involved in IWT are placing and layering funds through cash deposits (under the guise of loans or payments), e-banking platforms (e.g., electronic payment services that are tied to a credit card or bank account) and licensed money value transfer systems (MVTS) like ‘hawala’, ‘hundi’ and ‘fei chen’ which are usually community-based and draw on a network of brokers across countries to facilitate international transfers without money physically crossing borders. Third-party wire transfers through banks are also used.
Criminals involved in IWT also use shell and front companies to conceal payments and launder their money. Countries identified that criminals are primarily using shell companies to facilitate transfer of value between syndicate members, between buyers and sellers, or to hold assets. At the same time, criminals use front companies, which generally conduct legitimate activities simultaneously to illegal ones, to both facilitate the movement of the wildlife and to co-mingle licit and illicit proceeds.
Wildlife traffickers often use front companies that have connections to import-export industries to help justify the movement of goods and payments across borders (eg, plastics, timber, frozen foods, or artwork). Another common trend is the misuse of front companies with connections to the legal wildlife trade such as taxidermists, farms, breeding facilities, pet shops and zoos.Other industries that may be more vulnerable to misuse include traditional medicine, décor, jewellery and fashion, said the FATF.
Legitimate pet stores and private “zoos”, “farms” or “parks” are often used to facilitate the illicit pet trade in many countries (such as Asia and the Americas) and are used to justify trading, breeding, or otherwise exploit protected wildlife. The financial flows associated with this type of IWT activity are often significant, stated the report, mentioning that “tiger zoos” with a large number of tigers have profited from selling tiger cubs and parts. A captive tiger can be sold for anything between $2,000 to $30,000 while a lion from a private zoo can cost $10,000 to $25,000.
“New technologies play an important role in facilitating communication and non-face-to-face payments between buyers and sellers for illegal wildlife. In particular, encrypted communication platforms and illegal wildlife marketplaces hosted via social media sites, online vendor platforms, and the dark net increase the ease with which wildlife transactions can occur between buyers and sellers,” stated the report, adding that VPN connections disguise the location of wildlife traffickers.