Are you up to date on environmental crimes within the Anti Money Laundering Sphere?

With global environmental crimes generating around $110 to $281 billion in criminal gains per year, the FATF is raising the alarm on the issue. Through a FAFT report published in July 2021 and titled Money Laundering from Environmental Crime, the FATF is aiming to increase global awareness and encouraging collaboration between environmental agencies, relevant financial investigators and intelligence agencies. This includes the establishment of communication channels between AML/CFT authorities.

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The FATF document focuses on money laundering risks mainly from illegal logging, mining and waste trafficking. Each one of these environment crimes share one common denominator, the “low risk, high reward” factor. Indeed, environmental crime is deemed more lucrative and less risky due to low penalties, inconsistent regulatory and legal safeguards, and the comingling of legal and illegal actions.

As priority action, and as part of Recommendation 1 of the FATF Standards, countries are required to identify, assess and understand their country’s ML/TF risks. This includes countries with limited domestic natural resources, as the perpetrators could be using their financial and non-financial sector to facilitate laundering from such crimes.

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Countries should also ensure full implementation of the FATF standards as an effective tool to combat laundering from environmental crimes. This means that countries are required to ensure that their AML/CFT authorities are empowered to investigate and trace assets from these crimes.

Countries should also consider strengthening their legal frameworks to include more robust penalties. Establishing and consolidating dialogue and collaboration between the public and private sector and international organisations has also been highlighted by the FATF.

With the ever-growing ML/TF risks being at the forefront of international dialogue, the report comes at the right time, showing that perpetrators are becoming adept at identifying less conventional ways to further their gains. This means that countries are being urged to take immediate actions to combat environmental crimes.

The FATF document can be found here

If you wish to discuss these new developing areas within the AML space, get in touch with our Financial Crime Compliance Team.

Contact us

Mark Lautier

Mark Lautier

Tax Partner, PwC Malta

Tel: +356 2564 6744

Deborah Gatt

Deborah Gatt

Senior Manager, Financial Crime Compliance, PwC Malta

Tel: +356 2564 2343

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