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The U.S. Financial Crimes Enforcement Network (FinCEN) has released an advisory document, guiding financial institutions on how to file suspicious activity reports (SARs) related to environmental crime, after finding an upward trend in this type of crime.
Environmental crimes include wildlife trafficking, illegal logging, illegal fishing, illegal mining, and waste and hazardous substances trafficking.
According to the document, some international organizations estimate global environmental crimes generate hundreds of billions in illicit proceeds annually. It now ranks as the third largest illicit activity in the world following drugs trafficking and counterfeit goods. In addition, Interpol estimates that total proceeds from environmental crimes are growing at least by 5 percent each year.
“These crimes are relatively low risk activities with high rewards because enforcement efforts are limited, demand for the products and services generated by these crimes is high, and criminal penalties are not as severe as for other illicit activities,” the document says.
Environmental crimes often involve transnational organized crime and are associated with a variety of other crimes, including money laundering, corruption, theft, forgery, tax evasion, fraud, human trafficking, and drug trafficking.
FinCEN decided to prepare the advisory because environmental crimes are often related to corruption and transnational criminal organizations, both of which are named among FinCEN’s national anti-money laundering (AML) priorities.
Additionally, the agency sees a need to enhance reporting and analysis of related illicit financial flows, and because environmental crimes may contribute to the climate crisis.
The notice lays out specific instructions for financial institutions, including payments processors and crypto exchanges, on how to file environmental crime-related SARs.
Climate has been an important part of President Joe Biden’s agenda. Just hours after taking over the office in the White House, he announced that the U.S. would be returning to the Paris climate accord.
Lawmakers have also proposed a far-reaching framework within Biden’s Build Back Better act, to combat climate change by investing in clean energy and cutting climate pollution.
Earlier this month, the Office of the Comptroller of the Currency, which supervises large banks, also hinted at plans to issue high-level framework guidance on climate risk management by the end of this year.
