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27 July 2021, 11:42

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The FATF acknowledges how money laundering affects all parts of society.

FATF releases new report discussing the connection between environmental and financial crimes.




What is the FATF?

The Financial Action Task Force— often shortened to FATF— is an inter-governmental body created to prevent money laundering across the globe to minimise the harm of its consequences in society.  

On July 2021, the FATF released a report titled ‘Money Laundering from Environmental Crime’ which release implicitly acknowledged that focus on anti-money laundering should be continued as its effect on the environment has been and will continue to be enormous if precautions are not taken. According to the FATF, “This work aims to raise awareness about the financial flows that fuel environmental crime and how they are laundered.” 

The report emphasised and restated the connection between financial and environmental crime: 

The same individuals involved in environmental crimes are often engaged in other criminal activities such as corruption, tax crimes, and human trafficking.

FATF



What is Environmental Crime?

According to the FATF, there is no universal definition of environmental crime. However, it is generally understood that ‘environmental crime’ refers to any criminal offence that harms and endanger the environment.

These activities— especially when conducted without prior permission and planning— are disastrous to not only the environment, but also the economy and public safety.  




The concerns around Environmental Crime.

Environmental crimes have helped fuelled corruption because it is seen as a low priority for law enforcement to persecute as they are perceived as victimless crimes according to the U4 Anti-Corruption Resource Centre. 

Environmental crimes—such as illegal logging, illegal mining and waste trafficking— generate enormous criminal proceeds each year, with estimates ranging from USD 110 to 281 billion per year.

FATF

‘A Convergence of Threats,’ a report published jointly by UN Environment and INTERPOL in December 2016 revealed: environmental crimes are the fourth largest category of criminal activity in the world. In addition, environmental crimes are going up by 5 – 7% each year, becoming increasingly related to other criminal activities, meaning it is ‘a growing threat to peace, security, and stability.’ It should also be noted that ‘84 per cent of countries surveyed reported a convergence between environmental crime and other serious crimes, including Corruption (42 per cent) Counterfeiting (39 per cent) Drug trafficking (36 per cent) Cybercrime (23 per cent) Financial crime (17 per cent).’ 




What can we do about it?

Financial crime is often associated with environmental crime. Therefore, to lessen environmental crimes, it is essential that financial crimes are prevented through anti-money laundering measures.  

The European Commission has released a legislation entitled Directive 2008/99/EC on the protection of the environment to fight against environmental crimes whereas the UN General Assembly deemed environmental crimes to be as same as transnational organised crimes.  

However, it is important to recognize that whilst much has been done in taking preventative anti- money laundering measures, it is important to keep up— and do more— work to avoid dire consequences affecting all walks of society.  

Although it is heartening to see intergovernmental entities focusing on combating environmental crime, it is important as individual organizations to do our part as well. With DX Compliance, staying compliant is not a hassle anymore! 

At DX Compliance, we streamline your compliance process to help you be always compliant. Learn more about our solution here. 


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