Most Countries Missing Finances of Wildlife Trafficking: FATF

By Daniel Bethencourt

Wildlife traffickers are using a wide array of sophisticated techniques to launder billions of dollars but most law enforcement agencies around the world have yet to see a single suspicious activity report related to the crime, an intergovernmental group said Thursday.

The illicit industry, which generates between $7 billion and $23 billion in proceeds globally each year and enables the transmission of pathogens that spread between humans and animals like COVID-19, Ebola, MERs, and SARs, often relies on commingling profits with the legitimate wildlife trade to avoid detection, the Financial Action Task Force, or FATF, found in a 73-page report.

According to the report, wildlife traffickers employ nearly every other major money-laundering strategy, from hiding behind legal entities to moving value through hawala networks and mobile payments, frustrating efforts by global financial institutions to flag their transactions.

Law enforcement has also largely failed to prioritize the financial component of wildlife trafficking, according to the report, which FATF described as the first of its kind.

Leaders of wildlife-trafficking syndicates tend to reside in the countries where their goods are sold, according to the report, but pay associates to hire poachers in the countries where the animals are captured, bribe local authorities and enlist additional conspirators to smuggle the goods through major shipping hubs.

Unlike drug traffickers and other criminals, wildlife traffickers apparently launder their own funds rather than farm out those services to attorneys, accountants and other professional enablers, according to FATF.

Front companies play a role in nearly every stage of a syndicate’s operations, from receiving payments from buyers to justifying shipments to customs officials. While some front companies have purported to be involved in plastics, timber or frozen foods, others claim to be legal wildlife businesses, such as taxidermists, pet shops and zoos, FATF found.

In one example provided by Indonesia from 2018, a syndicate that was already engaged in a legal fishing operation used false identities to open bank accounts and disguise the sale of $9 million in pangolin scales from 2012 to 2017.

The group sent at least 129 transfers to 23 unspecified “beneficiaries in foreign supply companies” and received at least $6 million from convicted drug traffickers.

A second syndicate suspected of transferring wildlife from Africa to China that is now under U.S. investigation required its buyers to pay U.S. dollars to a broker in Thailand, according to FATF. The broker then directed an associate in China to transfer an equivalent amount of local currency into a Chinese bank account controlled by the traffickers, “all within hours.”

A third trafficker, a Malaysian national who shipped ivory and pangolin to Vietnam, told investigators that he accepted payments into his Malaysian bank account after arranging to have them routed through a money exchange house in an unspecified country.

“He claimed that the bank account details of the underground bank are valid for one day only, and that once the funds are deposited in the third country, the money is transferred to his bank account in Malaysia within two hours,” FATF reported.

Others have used less conventional methods, such as the mobile money application M-Pesa, and stored value cards. South African authorities have also arrested two suspected wildlife traffickers whose homes contained 7,000 iTunes gift cards worth roughly $1 million.

Despite the wide range of laundering strategies used by traffickers, FATF’s survey of roughly 50 countries found that that “the vast majority” of their financial intelligence units, or FIUs, did not actively coordinate wildlife-trafficking investigations and often failed to act on intelligence provided by domestic law enforcement.

“Only 13 of 45 jurisdiction responses reported receiving at least one STR [suspicious transaction report] relating to IWT [the illegal wildlife trade] in the past five years,” FATF found. “Instead, most cases are identified through customs seizures and human sources (e.g. whistleblowers, undercover agents and confidential informants).”

Only a quarter of the countries surveyed had ever sent or received a formal request for information from a foreign counterpart in the course of investigating a wildlife-trafficking group’s finances.

Some FIUs have made cases, however. In 2019, Malawian authorities arrested the head of a wildlife-trafficking group and launched a money laundering investigation after finding that he amassed unexplained wealth, made deposits with false names and appeared to open a shell company in his daughter’s name that they also linked to a loan-sharking operation.

Some financial institutions have also reported the occasional success.

According to South African investigators, one financial firm identified two suspected traffickers after searching for customers who mostly dealt in cash, resided near wildlife reserves and made round-dollar deposits that could have been bribes.

The report is probably the most thorough ever published on the subject of wildlife traffickers’ financial patterns but law enforcement still faces serious gaps in knowledge, such as the exact role of transit countries and shipping hubs that criminals use to convey the illicit goods, said Melissa Leeds, a former U.S. naval intelligence analyst.

Other gaps tie back to countries with officials who profit from the illegal wildlife trade through bribery or other means and are not eager to cooperate with foreign counterparts, said Leeds, now a consultant in Florida.

“We have a self-sampling group,” Leeds said of the report. “The individuals who are arresting people are the ones that care—those are typically the places where [the wildlife] is coming from.”

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Topics : Anti-money laundering
Source: FATF
Document Date: June 25, 2020