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Are Financial Institutions Directly orIndirectly Involved in Financing
Environmental Crimes?
By Aaron Lau
CAMS-Audit, Certified FraudExaminer, FCA (Aust), CA (Malaysia)
AITLAU Management Services Sdn Bhd
Date: January 18, 2019
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TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................................1
EXECUTIVE SUMMARY .....................................................................................................2
THE IMPACT OF ENVIRONMENTAL CRIMES .............................................................5
UNDERSTANDING THE SUPPLY CHAIN ........................................................................8
Supply Chain for Wildlife Trafficking...................................................................................8
Ozone-Depleting Substance (ODS) Smuggling...................................................................11
Supply Chain of Illicit Trade in Hazardous Waste ..............................................................12
Supply Chain of Illegal, Unregulated, and Unreported (IUU) Fishing................................13
Supply Chain for Indiscriminate and Illegal Deforestation .................................................14
VULNERABILITIES OF THE LEGAL ENVIRONMENT CRIME SUPPLY CHAIN17
ENVIRONMENTAL CRIME IS A SERIOUS CRIME ....................................................19
FINDINGS ..............................................................................................................................19
ANALYSIS .............................................................................................................................27
CONCLUSION ......................................................................................................................28
RECOMMENDATIONS TO FINANCIAL INSTITUTIONS AND ENTITIES.............31
RECOMMENDATIONS TO REGULATORS AND LAW ENFORCEMENTAGENCIES.............................................................................................................................35
GLOSSARY OF TERMS......................................................................................................38
APPENDIX 1
EXTRACTED FROM DIRECTORATE-GENERAL FOR EXTERNAL POLICIESPOLICY DEPARTMENT OF THE EUROPEAN UNION REPORT IN 2016, “LANDGRABBING AND HUMAN RIGHTS: THE INVOLVEMENT OF EUROPEANCORPORATE AND FINANCIAL ENTITIES IN LAND GRABBING OUTSIDE THEEUROPEAN UNION”
APPENDIX 2
TOOLS AND RESOURCES AVAILABLE TO HELP AML INVESTIGATIONSUNITS IN FINANCIAL INSTITUTIONS AND LAW ENFORCEMENT
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EXECUTIVE SUMMARY
Environmental crime is a serious crime. It deprives future generations of what we can enjoytoday. Environmental crime is now reported to be the fourth largest criminal activity in theworld—generating US$258 billion per year—and it is increasing between 5% to 7% each year,according to the United Nations Environment Programme (UNEP) Report on EnvironmentalCrimes. 1 The report also states, “There is a convergence between environment crime and otherserious crimes including corruption (42%), counterfeiting (39%), drug trafficking (36%),cybercrime (23%) and financial crime (17%)” (2017).
Environmental crimes comprise five areas: 1) illegal trade in wildlife in contravention to theConvention on International Trade in Endangered Species of Fauna and Flora (CITES); 2)smuggling ozone-depleting substances in contravention to the Montreal Protocol on Substancesthat Deplete the Ozone Layer; 3) illicit trade in hazardous waste in contravention to the 1989Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and OtherWastes and their Disposals; 4) illegal, unregulated, and unreported fishing in contravention tolocal and regional fisheries management organisations and illegal logging; and 5) theassociated trade in stolen timber in violation of the respective countries’ national laws.
This paper discusses offenses in these five areas and provides a general understanding of thesupply chain and the nature of the threat to the general population, as well as its impacts onsocio-economic factors and on Earth. Financial criminals often use the path of least resistanceto ensure that the job is done. These crimes are highly complex. They may pose great difficultyin detection to the financial crime investigators if they do not understand or are not familiarwith the different modus operandi that financial criminals deploy.
This paper exposes the possible and probable structural damage of environmental crime (if leftunchecked) on our atmosphere, biodiversity through deforestation, and the socio-economicimpacts on our population.
The Financial Action Task Force (FATF) has made environmental crime serious by includingit as one of its designated categories of offenses. The Asia-Pacific Group on MoneyLaundering (APG) has teamed up with the United Nations Office on Drug and Crime(UNODC) to come up with a 2017 report on the importance of disrupting the illicit financialflows arising or emanating from wildlife crime.
This paper incorporates case studies and two interviews (one from the Malaysian Fishermen’sCooperative, and the other by a former enforcement officer in the Malaysian FisheriesDepartment) to determine whether financial institutions were directly or indirectly involved infinancing environmental crime.
The results were:
No Case Study Conclusion1 Tokyo Olympics 2020—source of
timberYes, financial entities were alleged to be financingdeforestation in Indonesia directly and indirectly.
1 https://www.unenvironment.org/news-and-stories/story/environmental-crime
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No Case Study Conclusion2 Land grabbing in Brazil by financial
entitiesYes. financial entities that are asset managementcompanies did purchase the lands and were alleged tobe involved in deforestation in Brazil.
Land grabbing by Europeancompanies outside Europe
Financial institutions, and private equity andinvestment firms, were involved in land grabbingactivities, but no illegal deforestation was mentionedor reported apart from the impacts of land grabbingon human rights.
3 Palm oil plantations in South EastAsia
Yes, the financial institutions were financingdeforestation through controversial palm oilcompanies.
Soya bean plantations in Brazil Yes, the financial institutions were financing soyplantation in protected areas of the Amazon.
4 Illicit wildlife trade Cannot be determined, as there is very littleinformation about illicit wildlife and financialinstitutions cases
5 Illegal, Unreported and Unregulated(IUU) fishing
Cannot be determined, as there is limited or noinformation about the financing of IUU fishing
In an effort to combat and assuage the proliferation of environmental crime, the followingrecommendations with practical solutions have been made for the consideration and necessaryactions of the financial institutions and law enforcement agencies (LEA).
a) For Financial Institutions:
(i) To appreciate the importance and the need to collaborate with Non-GovernmentalOrganisations (NGO) to combat environmental crimes
(ii) To develop guidelines for the development of environmental crime typologies andhigh-risk indicators for their employees
b) For Law Enforcement Agencies:
(i) To recognize and gazette environmental crimes as predicate offenses under theirrespective Anti-Money Laundering (AML) legislations
(ii) To build environmental crime investigation capacity in the relevant LEAs(iii) To conduct concurrent investigations in jurisdictions where seizures of wildlife,
fauna, or flora, IUU fishing, Ozone-Depleting Substances smuggling, or traffickingof hazardous waste are reported and utilize mutual legal assistance treaties to obtainevidence to prosecute the environmental crime perpetrators
(iv) To empower the LEA freeze; seize and confiscate illicit assets derived fromenvironmental crimes
(v) To intensify efforts to assuage, if not exterminate, corruption as a means to disruptillicit wildlife trade
(vi) To enact appropriate laws to disrupt operations and financial operations ofenvironmental crime offenders
(vii) To work with environmental NGOs and stakeholders to help in investigationsEC
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The summary of findings does indicate that financial institutions in certain cases are involveddirectly and indirectly in financing corporations in the perpetration and proliferation ofenvironmental crime.
This paper also finds that environmental crime is not only a serious offense, but it has adeleterious impact on the environment, wildlife, Earth, and human beings. It depletes the ozonelayer, and this causes atmospheric warming, extinction of certain animals, adverse climaticchanges, and the pollution of rivers and seas that affect marine life and humankind.
When environmental crime has been ratified and gazetted as a predicate crime in all UNcountries, concerned parties should play their parts in combating environmental crime—theduty of global citizens of our planet.
All organizations, including financial institutions, have a duty to protect the environment. Theycan do so through strict compliance with, and enforcement of, their respective AML policieson Know Your Customer, Customer Due Diligence, and Enhanced Due Diligence, wherecircumstances so necessitate.
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THE IMPACT OF ENVIRONMENTAL CRIMES
Illegal Wildlife TradeIllegal trade in wildlife poses serious threats to thousands of species of plants and animals thatare being pushed to the brink of extinction. The Asia/Pacific Group on Money Laundering(APG) and the United Nations Office on Drugs and Crime (UNODC) worked together toproduce the “Research Report: Enhancing the Detection, Investigation and Disruption of IllicitFinancial Flows from Wildlife Crime.” The report estimates the total global proceeds of thelucrative illicit trade in wildlife products at US$7 to US$23 billion, annually (“APG-UNODCWildlife Report,” 2017). Wildlife crime has grown significantly and has become a specializedarea of transnational organized crime, driven by high demand and facilitated by a lack ofeffective law enforcement, low prioritization as a serious crime, and non-commensuratepenalties.
The nature of the threats: The extinction of species—extinction of tigers, pangolins, rhinos, elephants, and depletion
of marine wildlife Socio-economic impacts—revenue is lost by the government through tourism, livelihood
of the country is reduced, especially for the rural and aboriginal communities, and perhapseven the spread of modern-day diseases to rural and aboriginal communities, and vice-versa
Corruption—corruption is rife, and it undermines the rule of law, transparency, andaccountability
Ozone DisruptionLife on Earth depends on the ozone layer to shield the planet from harmful ultraviolet radiation.The ozone layer is formed by a band of ozone molecules (each ozone molecule comprises threeatoms of oxygen, or O3) in the stratosphere. This layer screens Earth from harmful ultravioletradiation emitted from the sun. Chlorine and bromine particles contained in Ozone-DepletingSubstances (ODS) react with the ozone when emitted, causing the thinning of the ozone layer.One of the manifestations of the “hole in the sky” was in Antarctica, in the South Pole. InSeptember 2011, the hole peaked, extending over 10 million square miles, the ninth biggesthole on record2. Many countries were signatories to the Montreal Protocol, and it was alandmark multilateral environmental agreement that regulates the phasing out of ODS. ODSare principally chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), normallyused for refrigeration and air conditioners. They also include halons, usually used for fire-fighting, and methyl bromide, normally used as a crop fumigant. It is estimated that the totalproceeds from East Asia alone is US$67.7 million per year3.
The nature of the threats: Depletion of the ozone layer—thinning of the ozone layer will have a negative impact on
human, forest, and marine ecosystems with changes in the intensity of ultraviolet radiation Impact on humans—with the thinning of the ozone layer, there will be a higher risk of skin
cancer and eye diseases. The emission of CFCs, HCFCs, and methyl bromide may impactour immune, respiratory, and digestive systems
Impact on agriculture—the depletion of the ozone layer may impact plants, which may notbe used to the intensity of the ultraviolet radiation
2 Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment. (2013). United Nations Office on Drugsand Crime. pp. 1153 https://www.unodc.org/documents/toc/Reports/TOCTA-EA-Pacific/TOCTA_EAP_c10.pdf
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Socio-economic impacts—there could be an increase in the cost of public healthcare, andaltered agricultural productivity could affect food security
Illicit Trade in Hazardous WasteThe illicit trade in hazardous waste relates to the international trade of waste or electronicwastes between countries for treatment, disposal, or recycling, usually exported fromdeveloped countries to developing countries. An example in Malaysia is how LynasCorporation Limited (LCL), an Australian Rare Earths mining company listed on theAustralian Stock Exchange, built near Kuantan a refining facility plant known as LynasAdvance Materials Plant (LAMP). The plant, licensed by the Malaysian Atomic EnergyLicensing Board, has been operating for six years. Based on the Annual Report of LCL, as ofJune 30, 2018, rare earth oxide ready for sale during the year was 17,753 metric tons (2017:16,003 metric tons). The point to note is that LCL is able to export rare-earth to be processedin Malaysia, but LAMP is not able to ship the radioactive wastes back to Australia for disposal,as the Western Australia Nuclear Waste Storage (Prohibition) Act of 1999 forbids the importof radioactive waste4. As at the date of this report, there are 1.11 million metric tons ofNeutralization Underflow Residue (NUF) and over 450,000 metric tons of radioactive waterleached purification (WLP) solid waste, which has not been disposed since its production. Themaximum amount of industrial waste for storage within the plant that is allowable by theMalaysian Government is 20 metric tons for a maximum period of six months. The questionis why did LCL not build a refinery in Australia? Why did it have to build it in Malaysia? Whatif there is a flood around the Kuantan area: will these NUFs and WLPs not leach or leak intothe underground rivers? The environmental impact is unquantifiable.
According to the UNEP’s 2015 report on “Action to meet the challenge of illegal trade inchemicals,” local and international crime syndicates earn an estimated US$22 billion to US$31billion annually from illegal trade in environmentally sensitive commodities, such as ODS,toxic chemicals, hazardous wastes, and endangered species.5
The nature of the threats: Environmental disruption—most of these wastes are disposed in three basic methods,
which are burying, burning, or recycling. With burying, it takes many years for wastes todecompose or break down. Burning causes harm to the environment, and recycling leadsto huge amounts of e-waste after the parts have been harvested and sold.Some of the e-wastes are disposed in rivers or oceans
Impact on humans—toxic metals in wastes can affect the immune, respiratory, anddigestive system of the human
Socio-economic impacts—increased cost of public healthcare and poverty
Illegal FishingIllegal, unregulated, and unreported (IUU) fishing is one of the greatest threats to the marineecosystem. According to the Food and Agriculture Organization of the United Nations (FAO),IUU fishing represents up to 26 million metric tons of fish caught annually, valued at US$10billion to US$23 billion. IUU fishing usually occurs on high seas, takes advantage of corruptadministrations, and exploits weak fisheries’ management regimes.
The nature of the threats:
4 http://my.news.yahoo.com/australian-mp-lynas-prohibited-importing-022124021.html5 UNEP's action to meet the challenge of illegal trade in chemicals. (2015).
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Environmental disruption—targeted fishing, as in fishing sharks for their fins, will cause agreat disruption in the marine ecosystem and ultimately the extinction of the species
Impact on humans—communities depending on fisheries for protein, and for theirlivelihoods, will experience a change in food security, and the subsistence (and existence)of worldwide coastal communities will be affected
Socio-economic impacts—national and regional efforts to conserve and manage fish stockswill be undermined
Illegal DeforestationThe indiscriminate and illegal deforestation of tropical forests is part of illegal logging.According to Forest and Finance,6 tropical tree cover loss has nearly doubled over the past 10years, and in 2017 alone, 15.8 million hectares of tropical forests were lost. The loss is due tothe rapidly increasing demand for agriculture commodities, such as palm oil, rubber, cocoa,beef, leather, and biofuels, which cause the increase in deforestation and land grabs in tropicalclimate countries. In South East Asia, the Amazon, and the Congo Basin, millions of hectaresof forest have been destroyed, and indigenous people and tribes have been stripped of theirhomes and livelihood to make way for agricultural production. Therefore, protecting theworld’s tropical forests in South East Asia, the Amazon, and the Congo Basin is critical inachieving Sustainable Development Goals and maintaining a habitable planet.
The nature of the threats:
Environmental impact—severe forest loss as a result of deforestation, degradation offorests due to selective logging of trees, loss of biodiversity, flooding, and soil erosion
Increase of greenhouse gases, such as carbon dioxide (CO2) and methane, which is a resultof deforestation; according to BBC’s “Climate Change: Where we are in Seven Charts andWhat You Can Do to Help,” published December 2018, cattle breeding to produce beef hasthe biggest climate impact (on average 75 greenhouse gas emissions per kilogram to a highof 145 greenhouse gas emission per kilogram)
Social impact—indigenous communities that depend on the forest for food and income willbe impoverished and oppressed
Undermining the countries’ laws and regulations Loss of state revenue through illegitimate trade in timber and licensing permits obtained
through bribery and corruption Increase in corruption—endemic or systemic corruption in the forestry and land sectors
(though permits and licenses), political corruption, and a compromised judicial system
Impact on Financial InstitutionsMost important of all, if environmental crimes are predicate offenses to the Anti-MoneyLaundering (AML) legislation, then all proceeds generated from environmental crimes willneed to be laundered. We see environmental crimes taking place, but whether financialinstitutions are financing these activities is what we will focus on.
It is difficult for financial institutions to constantly monitor their customers’ business activities,more so when they border between the limits of legality and illegality. However, they shallneed to be aware that the facilities granted to them are not being diverted for illegal purposes,such as environmental crimes or other illicit activities in contravention to the AML legislations.
6 http://forestsandfinance.org/wp-content/uploads/2018/10/Forests-Finance-Brochure.pdf
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Would financial institutions recall their financial facilities from their clients if they are foundto be committing or abetting the commission of environmental crimes?
UNDERSTANDING THE SUPPLY CHAINThe lucrativeness of business associated with environmental crimes is great. The demand forsanctioned goods and supplies is increasing each year. The revenue is attractive enough forthe big-time syndicates to take the investment risk. It is no wonder these big syndicates areinvesting their funds to set up modern business organizations in the form of supply chains tosource, purchase, transport, process, and market their banned merchandise through subtle andsophisticated means.
The flow of sanctioned raw materials from Third World Countries to developed economies isnever a linear path, along which the mules and goods are exposed to great risks andvulnerabilities of being uncovered, detained, indicted, fined, and convicted by security guardsat border check points. Great losses may ensue when the goods are confiscated and destroyed.
Even though the sanctioned goods may escape detection at the border security check-point,there is still no guarantee that they will reach their destined warehouse or manufacturer, wherethey are processed or reprocessed to cater to the local or overseas market demands.
In view of the special nature of the business, professionals are engaged to provide the brains tooperate these gigantic, vulnerable organizations. These multi-national companies (MNCs) mayrequire, for their operations, heavy borrowings and other banking facilities from the banks andfinancial institutions. These facilities are deployed in setting up factories to process theenvironmental crime merchandise, purchase, and modify transport vehicles to conceal andsmuggle processed or raw goods. These MNCs operate like any professional businessorganization. With strong relationships with the financial institutions, securing financialfacilities from them is less problematic and cumbersome.
An understanding of the supply chain and its common modus operandi is crucial to fightingenvironmental crimes. A brief view of the different supply chains is given below.
Supply Chain for Wildlife TraffickingWe have been harvesting natural resources from plants and from the animal kingdom for food,medicine, and clothing since the origin of our species, Homo sapiens. With the increase inpopulation and the affluence of the middle class, especially in countries such as China, thedemand for food, medicine, and clothing that comes from protected species and rare animalshas increased. Many have also demanded to have rare species of animals taken in as pets.Traditional medicine demands have caused the increase in wildlife trade, as a result ofunverified beliefs about traditional properties of rare plants and animal parts.
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Diagram 1 illustrates a simplified supply chain for wildlife and wildlife products, and how theyget to the consumer market.
Diagram 1
The wildlife or wildlife products are initially sourced from the jurisdiction/country by poachersor by criminal groups and distributed to the local facilitator or broker, who in turn sells, orarranges to sell, to the domestic market. If the local facilitators or brokers operate under aninternational consortium or group, then the illicit merchandise may be smuggled or traffickedto another jurisdiction of demand. In the process, the wildlife or wildlife products will beprocessed to any part of the consumer demand: cosmetics, jewelry, food, medicine, etc.
The supply chain for wildlife trafficking is actually very complicated. Each commodity,whether for the domestic or international market, has its unique supply chain, smugglingmethods, and trafficking routes. Major activities of the supply chain involve, inter alia, thestorage, handling and transportation of the wildlife, manufacturing, industrial production,marketing, and retailing of wildlife products.
Table 1 below shows the type of wildlife, uses, suppliers, and buyers/consumers of wildlife.
Wildlife Uses Supply and DemandElephant ivory7 Ornaments such as
rings, bangles madefrom ivory
Supply: Africa (Sudan, Chad, Niger),Myanmar, ThailandDemand: China
Rhino Horns8 Traditional medicineto cure cancer
Supply: Africa (Zimbabwe, South Africa),India, NepalDemand: China and Vietnam
7 Lohanan, R. (2002). “The elephant situation in Thailand and a plea for co-operation.” Iljas Baker and Masakazu Kashio(Editors), Giants on our hands, Proceedings of the international workshop on the domesticated Asian elephant, UN Food andAgricultural Office (FAO); 2002;Stiles 2009. Daniel Stiles, The elephant and ivory trade in Thailand, TRAFFIC Southeast Asia, Malaysia, 2009.8 Van Strien, N. J., et al. (2008). “Dicerorhinus sumatrensis.” IUCN Red List of Threatened Species, International Union forConservation of Nature and Natural Resources. Accessed at: http://www.iucnredlist.org/apps/redlist/details/6553/0
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Wildlife Uses Supply and DemandBear bile andgall bladders9
Used commonly intraditional medicine inEast Asia
Supply: China, Japan, Laos, Myanmar,Republic of Korea and VietnamDemand: South East Asia, Hong Kong,Taiwan,
Pangolin10 Used for traditionalmedicine and “luxury”food
Supply: Africa, South East AsiaDemand: China, Hong Kong, Taiwan andVietnam
Orchids11 Traditional medicine Supply: ThailandDemand: Singapore, China
Tiger12 meat,skin,reproductiveparts and otherparts
Traditional medicine,luxury food andtaxidermic mount.
Supply: EuropeDemand: China (Food and TraditionalMedicine)
Table 1
Wildlife and wildlife products are sourced mostly from Third World or developing countries.Improved transportation infrastructure and access routes in these countries facilitate traffickingof wildlife.13 Wildlife are transported by land, air, or sea in many ingenious ways. By land,the merchandise can be hidden in special compartments in vehicles and containers usingdouble-layering methods. Some may even modify the air conditioning and ventilation systemsof the vehicles for ferrying live animals. For large consignments, international or domesticcourier companies may be used.
Attempted smuggling through the use of fraudulent paperwork and through mixing of illicitand licit merchandise is often deployed for plants and animals, which are passed off as captive-bred.14
Malaysia, Singapore, Thailand, and Vietnam, by virtue of their strategic geographicallocations, provide convenient transhipment gateways to China, Japan, Taiwan, and Hong Kongfrom Europe, Africa, and India. Many of the mentioned countries are both consumers, as wellas major trade conduits to China.15 In some South East Asian countries, illegal wildlife, suchas exotic birds, animals, and their parts, are sold by the roadsides and in open market squares.
Tiger parts,16 such as skin, meat, bones, reproductive organs, and heads, have been respectiveuses for wall decorations, food, ornaments, aphrodisiacs, and taxidermic mounts. These items
9 K.E. Foley, C.J. Stengel, and C.R. Shepherd (2011). Pills, Powders, Vials and Flakes: the bear bile trade in Asia. TRAFFICSoutheast Asia, Malaysia.10 Duckworth, et al. (2008). “Manis javanica.” IUCN Red List of Threatened Species, International Union for Conservationof Nature and Natural Resources. Accessed at: http://www.iucnredlist.org/apps/redlist/details/6553/0.11 https://news.nationalgeographic.com/2017/11/wildlife-watch-illegal-orchid-trade-ornamental-food-medicine/12 EIA (2010). Environmental Investigation Agency, Enforcement not Extinction: Zero tolerance on tiger trade. London, UK.13 TRAFFIC (2008). TRAFFIC, What’s Driving the Wildlife Trade? A Review of Expert Opinion on Economic and SocialDrivers of the Wildlife Trade and Trade Control Efforts in Cambodia, Indonesia, Lao PDR and Vietnam, East Asia andPacific Region Sustainable Development Discussion Papers. The World Bank. Washington DC. p. 614 Vincent Nijman and C. R. Shepherd. (2009). Wildlife trade from ASEAN to the EU: Issues with the trade in captive-bredreptiles from Indonesia. TRAFFIC Europe Report for the European Commission. Brussels, Belgium.15 The World Atlas Illicit Flows, Interpol, Rhipto, The Global Initiative Against Transnational Organised Crime. (2017).16 EIA. (2010). Environmental Investigation Agency, Enforcement not Extinction: Zero tolerance on tiger trade. London,UK.
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are in great demand in China, as the population becomes more affluent—principally demandedby the business elite, public officials, and even military officials.
Traders have taken advantage of Internet access, social media, Internet advertising, and Internetbanking to market illegal wildlife products. Some have moved to the dark web. Items that arevery commonly traded include, inter alia, ivory and protected animal and plant species such astiger parts, birds, and primates. There are usually inconsistencies in their advertisement; forexample, traders usually disguise the illegal items. They claim that they are imitations, butcertify their products as authentic in the items’ description pages. Some claim that they arehistorical artefacts, but do not have the necessary documents to prove their claims.
Most of the transactions are in cash, and purchases of wildlife and/or wildlife harvests takeplace at the sourced jurisdiction. In the transit and final destination jurisdictions, environmentalcriminals may have bank accounts and trade finance facilities at financial institutions to helpin the financing of the purchase of the wildlife and/or wildlife products.
Ozone-Depleting Substance (ODS) SmugglingThe UNODC has uncovered many methods of ODS smuggling since the Montreal Protocol,which was agreed upon in 1997 and became effective in 2000.17 The requirement was toimplement an ODS licensing system. Under the terms of the system, countries are obliged tolicense firms or companies importing ODS, with a recommendation that exports are alsolicensed.
The supply chain is illustrated with a simple diagram (Diagram 2), showing how ODS issourced and then shipped to the final destination, via a transiting jurisdiction.
Diagram 2
The main producers of CFCs and HCFCs are located in Zhejiang Province of the People’sRepublic of China (PRC). The CFCs and HCFCs are shipped through certain South East Asiancountries, India, and the Middle East to industrialized countries such as Japan, Europe, andAmerica.
Transactions between the exporter and importer take place normally through banks in whichboth parties may establish their bank accounts and trade facilities to finance their business
17 UNEP. (1999). United Nations Environment Programme, ODS Import/Export Licensing Systems Resource Module.
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operations. Payments for purchases are made to exporters’ bank accounts. Hence, it is notunreasonable to opine, or even assume, that financial institutions are involved by facilitatingand financing ODS goods.
Supply Chain of Illicit Trade in Hazardous WasteTrade in hazardous and other wastes, including electronic waste, is regulated by the BaselConvention. Electronic and electronic waste, or e-waste, covers items such as personalcomputers, televisions, mobile phones, printers, refrigerators, and air-conditioning units. E-waste is also considered a hazardous waste, as it may have hazardous or non-hazardous wastein accordance with the Basel Convention Annex VIII and Annex IX, respectively, and can haveadverse impacts on both the environment and on human health.
Diagram 3, below, illustrates the supply chain and how e-wastes are generated. It starts withthe equipment and electronic equipment manufacturer, which produces equipment for sale.Once the product has reached its obsolescence phase, or has become dysfunctional or beyondeconomical repair, it is disposed as e-waste. E-waste is then collected by recycling plants torecycle the waste (if possible). The bulk of this collected waste is sold to Third World countriesfor recycling. E-wastes that cannot be recycled are either put into landfills or discarded ontosidewalks, open dumps, remote islands, or the ocean or sea.
Diagram 3: Supply Chain on Trade of Hazardous Industrial Waste
It has been reported that toxic waste dumping has been carried out by developed countries todeveloping nations in the late 1980s.18 In March 1988, a Norwegian shipping companydumped 15,000 metric tons of incinerator ash from Philadelphia into a quarry in Kassa Island,Guinea. This was only discovered when the island’s vegetation began to wither and die.19 In2006, 17 people died; over 80,000 were forced to seek medical aid and attention due tovomiting, nosebleeds, and difficulty breathing in Abidjan, Ivory Coast. This was due to 500metric tons of toxic waste (later found to be sulphur hydrocarbon, which is usually found inseveral types of crude oil) being dumped by Trafigura into 14 sites around the city, near watercatchment areas, rivers, and agricultural sources.20 These incidents of toxic waste dumping
18 Lipman, Z. (2011). Trade in Hazardous Waste: Environmental Justice Versus Economic Growth [Web article]. RetrievedFebruary 21, 2011, from http://ban.org/library/ lipman.html19 Vir, A. (1989). Toxic trade with Africa. Environmental Science & Technology, 23(1), 23-25. doi: 10.1021/ es00178a60020 Mason, B. (2006, October 24). Toxic waste dumping in Ivory Coast. World Socialist Web Site. Retrieved February 21,2011, from http://www.wsws.org/
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usually involved wastes or by-products of industry (e.g., petroleum refining or rare-earthproduction), such as radioactive material, sludge, and heavy metals.
Today, e-waste disposal has become the main focus, as stated in UNODC’s 2009 report onTransnational trafficking and the rule of law in West Africa. Accordingly, all unwantedelectronic and electrical equipment is disposed at labor-intensive recycling facilities. Activitiesat these facilities include:21
o stripping of metals in open-pit acid baths to recover valuable metals, such as gold,copper, platinum, and silver
o removing electronic components from printed circuit boards by heating over a grillusing honeycomb coal blocks (coal mixed with river sediment, which is contaminated)as fuel
o chipping and melting plastics without proper ventilationo burning cables for recovering metals and also burning unwanted materials in open airo disposing unsalvageable materials in fields and riverbankso toner sweepingo dismantling electronic equipment
Workers are seldom provided with industrial safety apparel, goggles, or shoes in theserecycling plants. Owing to lax enforcement of laws relating to Industrial Occupational Safetyand Health, workers are exposed to constant inhalation of toxic dust and fumes emanating fromthe above industrial activities. Many, as a result, suffer from various respiratory and skindiseases.
UNEP-Interpol 2016 reports22 state that waste trafficking originates mainly in developedcountries, with the EU, USA, Japan, and Australia commonly identified as the main exportersof illegal waste shipments. The main destination continents for illegal waste trafficking areAfrica and Asia.
The companies that trade or ship hazardous wastes will usually have bank accounts and tradefinance facilities in financial institutions. Similarly, end buyers will have bank accounts andtrade finance facilities to help in the financing of their purchases.
Supply Chain of Illegal, Unregulated, and Unreported (IUU) FishingAs the world’s population increases, the demand and consumption of food (including fish) islikely to increase. IUU fishing alone accounts for an average of 18% (geographically ranging3–37%) of the global catch, or as much as 11–22 million tons of fish.23
According to a 2005 report by the Organisation for Economic Co-operation and Development(OECD), Why fish piracy persists: The economics of illegal, unreported and unregulatedFishing, IUU fishing still persists because there is a “global imbalance between the capacity tofish and the opportunities available for fishing.” This overcapacity is a result of poor domestic
21 Frazzoli, C., Orisakwe, O. E., Dragone, R., & Mantovani, A. (2010). Diagnostic health risk assessment of electronic wasteon the general population in developing countries' scenarios. Environmental Impact Assessment Review, 30 (6), 388-399.doi: 10.1016/j.eiar.2009.12.00422 UNEP-Interpol. (2016). The rise of environmental crime: A growing threat to natural resources peace, development andsecurity23 David J. Agnew, John Pearce, Ganapathiraju Pramod, Tom Peatman, Reg Watson, John R. Beddington, Tony J. Pitcher.(2009). “Estimating the Worldwide Extent of Illegal Fishing.” Plos One 4, no. 2
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fisheries management, including a lack of incentives to scrap vessels or inappropriate allocationof fishing rights.
IUU fishing normally takes place in high seas, where monitoring and regulation is almost nil,and/or in jurisdictions where the fishing vessel is not supposed to fish. It can take the form ofnot reporting, or misreporting, to the national fisheries authorities and involve fishing vesselsunder the flag of a country, not part of a fishery organization.
The diagram below is a simple illustration on the supply chain and how IUU fishing and legalfishing reach the fish processing factory and the consumer market.
Diagram 4: Supply chain on IUU fishing—from factory to market
The illegally caught, unregulated, and unreported fish will be sold to brokers, who will forgedocuments to provide legal grounds to the illegally caught fish. These fish will be sold to thewet market fishmongers or to the fish processing factory. Both wet markets and the processingfactories will get legal and illegal fish, comingled.
Most of the transactions to purchase fish involve cash. However, companies that purchase fishcommercially will have bank accounts and also trade facilities to finance the purchase of thebulk fish. Financing from banks will be required to build boats and fish processing factories.Most fishing boats will be financed by the commercial fishing companies.
Supply Chain for Indiscriminate and Illegal DeforestationCurrently, the production of beef, palm oil and soy plantations, and wood-based productscontributes significantly to deforestation, climate change, and biodiversity loss. In manyoccasions, land rights will come into conflict, corruption issues will arise, and labor rightsviolations will occur.
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UNEP and INTERPOL, in their 2014 report titled, “Green Carbon, Black Trade: IllegalLogging, Tax Fraud and Laundering in the World’s Tropical Forest”, lists 30 ways ofconducting illegal logging and laundering illegal wood. They include:
1) logging in protected areas;
2) logging without permits in unprotected areas;
3) illegal logging in conflict zones;
4) logging in excess of permit or concession quotas;
5) logging with forged or re-used permits;
6) obtaining logging permits illegally through bribery;
7) establishing or expanding palm oil, bio-fuel, or other plantations with no permits;
8) illegal cattle ranching and soy production; and
9) widening road corridors, mining, or other felling without a permit.
Illegal Timber
Diagram 5 illustrates the supply chain and how illegal timber is harvested from the forest, thencomingled with legal timber obtained from concessions, then exported as timber, processedwood, pulp, or chips.
Diagram 5: Illustration adapted from the diagram in Illegal Logging and Log Laundering from The World AtlasIllicit Flows, Interpol, Rhipto, The Global Initiative Against Transnational Organized Crime (2017) pp. 59
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Illegal logging is a big-time business involving consortium with international connections inthe timber trade. It is conducted by companies with a public face with often internationalshareholders. These shareholders’ companies are usually already in the existing legal timbertrade.24
Tropical countries, namely Malaysia, Indonesia, Brazil, and Congo, are sources of timber,which is exported to Japan, Europe, and the United States of America.
Most of the importing companies that purchase timber will have bank accounts and also tradefacilities to finance the purchase of the timber. Besides, they may bank facilities establishedfor:
purchase of land and concessions to harvest the trees; purchase of factories, plants, and machinery to build a mill; and purchase of timber in large quantities using trade finance.
Deforestation for Plantations
Diagram 6 illustrates the supply chain and how deforestation takes place to make way for soyor oil palm plantations. The uncertified oils are comingled at the refineries before they are sentor shipped to the trader for distribution to the consumers.
Diagram 6: Illustration on How Oil Reaches Global Brands (adapted based on the diagram fromhttps://beforeitsnews.com/v3/environment/2013/2481658.html)
24 Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment, United Nations Office on Drugs andCrime. (April, 2013). pp. 90
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Great challenges betide any intent to certify products from the above four illustrated scenariosas deforestation free.
Most of the companies that purchase palm or soy oil will have bank accounts and also tradefacilities to finance the purchase of the palm or soy oil. The bank financing will usually beused to:
purchase land to plant the trees; purchase factories, plants, and machinery to build refineries or a mill; and purchase palm or soy oil in large quantities using trade finance.
VULNERABILITIES OF THE LEGAL ENVIRONMENT CRIME SUPPLY CHAINEach of the supply chains of environmental crime has its vulnerabilities where the weaknessescan be misused. They are discussed and listed below.
Wildlife Supply Chain
According to UNODC,25 the most vulnerable point or weakness occurs where:
If the species are not listed on the Convention on International Trade in Endangered Speciesof Fauna and Flora (CITES), then illegally sourced wildlife products can be freely tradedinternationally once they have departed their jurisdictions of origin.
If there are no controls or weak controls in the source jurisdiction, then illegally acquiredwildlife may be introduced into the legal supply chain before export.
Farm laundering—captive breeding or wildlife farming operations can be used to launderillegally-caught wild animals.
Fraudulent paperwork—the main proof of wildlife legality relies on a system of permitsand paperwork. Fraudulent paperwork can transform illegally obtained wildlife intoseemingly legitimate merchandise, enabling it to be openly traded and evade interdiction.There are many ways to create fraudulent paperwork, including false declarations of captivebreeding, purchasing paperwork from corrupt officials, forging paperwork, re-using oraltering old permits, etc.
ODS Smuggling
The most vulnerable point for ODS smuggling occurs even with this licensing system. Someof the smuggling methods are:26
False labelling—this is where ODS are smuggled through cylinders or packaging labelledas legal products.
Mis-declaration—ODS are disguised with names of other similar, legal chemicals onshipping documents and invoices.
Fake recycled materials—recycled ODS is less regulated than virgin CFCs. As such,smugglers will add a small amount of contaminant to the virgin CFCs to make it appearthat it has been recycled when tested.
Concealment—ODS are hidden in ships, cars, or trucks and moved across borders. Othermethods include “double layering,” or filling a shipping container with cylinders of illegalODS except for a layer of the legitimate chemical stated on the Bill of Lading next to thecontainer door.
25 UNODC. (2016). World Wildlife Crime Report: Trafficking in Protected Species. pp. 16-1926 Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment, United Nations Office on Drugs andCrime. (April, 2013). pp. 117
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Transhipment fraud—this often involves complex shipping routes, passing through transitports and free-trade zones where customs procedures may be more relaxed.
Trade in Hazardous Waste Supply Chain
Today, there have been very few recorded incidents of toxic waste dumping due to theawareness campaigns run by non-profit organizations, media publications, and socialenterprises. The most vulnerable point of e-waste27 occurs where: Mis-declaration—e-waste is being classified as working computers (not considered to be
hazardous waste by the Basel Convention), which are in fact scrapped computers onshipping documents and invoices. Some also declare these items as second-hand goods,used electronic goods, personal effects, plastic scrap, or mixed metal scrap.
Concealment—Methods include “double layering,” which is filling a shipping containerwith scrap monitors except for a layer of the legitimate working monitors on the Bill ofLading next to the container door.
Transhipment fraud—this often involves complex shipping routes, passing through transitports and free-trade zones where customs procedures may be more relaxed. One suchexample is Batam Island in Indonesia,28 which traffickers use because they are exempt fromgovernment regulations and can avoid confiscation of e-waste shipments.
IUU Fishing Supply Chain
The vulnerable point noted for IUU fishing is the paying of bribes to the fisheries and portauthorities for documentation to declare illegal fish and forged documents and claim that illicitcatches were done legally.
Indiscriminate and Illegal Deforestation Supply Chain
The main vulnerable points where illegal timber can be laundered are:
Comingling legal and illegal timber Paying bribes to port authorities to get cross-border transportation permits for the
comingled timber to be exported, and then re-importing back to the country of origin, orbribes to forest authorities to obtain forest permits to companies that are ineligible toreceive the permits (those that do not have a detailed forest management plan)
Under-reporting of actual capacity, and production in mills, to regulatory authorities toappear that the operations are modest
Document fraud to facilitate illegal logging-like forged permits or fraudulent paperwork tofalsely certify the origin of timber, recertifying the origin of timber from acceptable sources
Many of the regional timber brokers act as intermediaries in the chain of ownership oftimber. The brokers also use free-trade zones to launder their timber. An example is howIndonesian illegal timber used Singapore’s free-trade zones to launder the timber on-routeto China, India, and Malaysia.29
27 Frazzoli, C., Orisakwe, O. E., Dragone, R., & Mantovani, A. (2010). Diagnostic health risk assessment of electronic wasteon the general population in developing countries' scenarios. Environmental Impact Assessment Review. 30 (6), 388-399.doi: 10.1016/j.eiar.2009.12.00428 Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment, United Nations Office on Drugs andCrime. (April, 2013). pp. 10729 EIA/Telapak. (May, 2003). Environmental Investigation Agency / Telapak, Singapore’s Illegal Timber Trade and the US-Singapore Free Trade Agreement. London, UK. p. 7.
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Breaking down the illegal timber into processed wood, chips, pulp, or paper beforeexporting to erase the traceability of the source of timber
Vulnerable points to observe how land for plantations, or for animal farming, are obtained are:
Paying bribes to land and forest authorities to obtain land and forest permits to companiesthat are ineligible to receive the permits (those that do not have a detailed forestmanagement plan) to chop down the forests for plantations
Land grabs for agriculture purposes since the 2007–2008 world food price crisis30
Plantation or cattle breeding done on land through illegal deforestation or open burning toclear the land for intended use
ENVIRONMENTAL CRIME IS A SERIOUS CRIMEEnvironmental crimes can no longer be seen as a conservation challenge. They impact andthreaten sustainable development, governance, rule of law, and even national security.31
The Financial Action Task Force (FATF) 40 Recommendations has included environmentalcrimes as part of its designated categories of offences. In the Interpretive Note toRecommendation 3, paragraph 4 states that countries should, “at a minimum, include a rangeof offences within each of the designated categories of offences.”32 This includesenvironmental crimes. Countries that are members of FATF and also members of FATFRegional Styled Bodies, such as the APG, would be required to ratify their national legislationsto include environmental crimes as part of the predicate offenses or serious offenses.
As most of the countries’ natural resources are controlled by the government of the day, FATFrequires countries to put in place preventative measures to deal with financial risks from bothdomestic and foreign “Politically Exposed Persons” (PEP). The implementation of criminalprosecutions and asset forfeiture as a strong deterrent, which can help in the recovery of ill-gotten assets coupled with international cooperation, has been seen as an important aspectemphasized by FATF, as environmental crimes are normally cross-bordered in nature and arecommonly executed by organized criminal groups.
APG showed its commitment by teaming up with the UNODC in 2015 to undertake a researchproject, which involved data and information on financial flows from wildlife crime. OnSeptember 13, 2017, APG, together with UNODC, published the results of the report entitled,Enhancing the Detection, Investigation and Disruption of Illicit Financial Flows from WildlifeCrime. Previously, APG published on July 31, 2008 a typology entitled APG Illegal Loggingand Money Laundering Issues Typologies Report 2008.
FINDINGSOur research shows that not all environmental crimes, such as IUU Fishing, ODS smuggling,hazardous waste trafficking, and even wildlife trafficking reports the flow of illicit money andpayment methods. As such, we will present cases where there is an inexplicable link wherefinancial entities have been involved in environmental crimes.
30 World Food Situation. FAO. Archived from the original on 29, April 2011. Retrieved 24 April 2011.31 INTERPOL-UN Environment. (2016.) Strategic Report: Environment, Peace and Security – A Convergence of Threats. p.5832 http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF%20Recommendations%202012.pdf
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Financial Entities and Deforestation
Case Study 1: Tokyo Olympics 2020—Source of Timber
The Tokyo Olympics 2020 is looming around the corner. The promise from the organizers andsponsors was to “showcase solution models to people in Japan and around the world” andcontribute to the realization of the Sustainable Development Goals.”33 The Olympics havedefinitely spurred growth in the construction industry, increasing demand for timber andconstruction materials. The Tokyo Games organizers promised to “implement sustainablesourcing and promoting sustainability among supplies, licensees, and their supply chains thatundertake manufacturing and distribution of products and services required for the Games.”34
Where is the main source of timber coming from?
Joint research reports were published in November 2018 by the RAN, WALHI, TuK Indonesia,and Profundo entitled Broken Promises: A case study on how the Tokyo2020 Games andJapanese financiers are fueling land grabbing and rainforest destruction in Indonesia(“Broken Promises Report”) and Perilous Korindo, Land Grabbing & Banks (“PerilousKorindo Report”). The reports state that the main source of timber is allegedly coming fromPT Korindo Group, an Indonesian-Korean company incorporated in Indonesia, and Shin YangGroup, a Malaysian-incorporated company, supplying to the Japanese intermediary company,Sumitomo Forestry. Extensive research was done, and reports were published after “Officialsconfirmed in February 2018 that at least 87% of the plywood panels used to construct the NewNational Stadium, where the opening and closing ceremonies will be held, were derived fromtimber in Malaysia and Indonesia,” according to The South China Morning Post on April 8,2018.35 The Broken Promises Report states that the financiers for Sumitomo Forestry and PTKorindo Group, based on information available, are as follows:
Company Financial Entities Financing Amount
Sumitomo Forestry SMBC Group, MizuhoFinancial Group and SumitomoMitsui Trust
US$45.2 million inrevolving credit facilityin 201836
PT Korindo Group’spulpwood subsidiary PTKorintiga Hutani
Bank Negara Indonesia, SMBCGroup and Japan Bank forInternational Cooperation
US$40 million37
Table 2: The Financial Entities that Financed Sumitomo Forestry and PT Korindo Group
33 Tokyo 2020 Olympic & Paralympic Games Sustainability. Plan Ver. 2 (June, 2018).https://tokyo2020.org/en/games/sustainability/sus-plan/data/20180611-sus-plan-2_EN.pdf34 https://tokyo2020.org/en/games/sustainability/sus-plan/data/201806-sus-policy_EN.pdf35 https://www.scmp.com/week-asia/society/article/2140659/how-tokyo-2020-games-are-killing-rainforests-malaysia-and36 http://forestsandfinance.org/37 RAN, WALHI, TuK Indonesia and Profundo. (2018.) Broken Promises: A case study on how the Tokyo2020 Games. pp.9
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Naturally, the Tokyo Olympic 2020 organizers vehemently deny the claims of the BrokenPromises Report and the Perilous Korindo Report in a statement published in The SingaporeStraits Times on November 12, 2018.38
However, PT Korindo Group is not a new kid on the block. It has also been implicated inreckless rainforest destruction and illegal burning, according to Reuters in a news coverage onSeptember 2, 2016.39
“There is no smoke without a fire,” as the saying goes. Transparency of the source of timberusing clear Timber Sourcing Code is paramount. The financial institutions exposed are fromIndonesia and Japan, and these financial institutions that have been caught financing illegaldeforestation for sources of timber should strengthen their financing and credit policies andsustainable policies; be transparent and disclose any financial exposures to forest-risk sectors;and engage with their customers on ESG risks. The Tokyo Olympics Organising Committeehas to conduct a thorough investigation on the source of plywood panels and make the findingspublic.
Case Study 2: Land Grabbing by Companies and Financial Entities
Land grabbing is complex and multi-layered process that involves many stakeholders andissues, such as the seller, the purchaser, the impact on the environment, the indigenouscommunities, and sovereignty of the country’s land. The intended use of the land is inter-connected with the stakeholders. Therefore, land grabbing cannot be viewed in a silo, static,or technical way.
Table 3 shows the land grabs in Brazil that are linked to 423,242 hectares of deforestation aspublished on December 18, 2018, by Chain Reaction Research.40
Investor / Company Countryof origin
Local company / entity Size ofland
holdings(ha)
Deforestation(ha) since
2000
Nuveen* USA Radar, TCGA I, TCGA IICaracol
299,025 72,753
Harvard EndowmentFund**
USA Agropecuária / Agroflorestal,Gordian Bioenergy / Terracal,InSolo
294,000 53,117
Brookfield AssetManagement*
Canada Brookfield Agriculture GroupBrasil
269,000 13,746
Cresud* Argentina BrasilAgro 238,705 123,955
Mitsui & Co* Japan Agrícola Xingu, SLC-MITEmpreendimentos AgrícolasS.A.
87,000 44,957
Valiance Capital * UnitedKingdom
SLC LandCo 86,574 66,234
Ridgefield CapitalAsset Management
USA Agrinvest Brasil, Agrinvest 75,581 24,841
38 https://www.straitstimes.com/asia/east-asia/environment-group-accuses-tokyo-olympics-organisers-of-using-illegally-sourced-wood39 https://www.reuters.com/article/us-indonesia-environment-idUSKCN1181NZ40 https://www.profundo.nl/en/projects/foreign-farmland-investors-in-brazil-linked-to-423-000-hectares-of-deforestation
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Investor / Company Countryof origin
Local company / entity Size ofland
holdings(ha)
Deforestation(ha) since
2000
Shree Renuka SugarsLimited*
India Renuka do Brasil 78,000 -
Altima Partners,Capital Group **
UnitedKingdom,
USA
El Tejar 76,840 -
MistubishiCorporation*
Japan Agrex do Brasil 73,600 -
Genagro Ltd* UnitedKingdom
Agrifirma 56,387 23,639
Total 1,634,712 423,242Table 3: Table of the land size that investors or investors purchased and the land size that has been
deforested
* Self-reported ** Third-party source
Table 3 further indicates that financial entities (in red font) do finance the purchase or leasingof the land.
Another report published in 2016 by the Directorate-General for External Policies PolicyDepartment of the European Union entitled Land grabbing and human rights: The involvementof European corporate and financial entities in land grabbing outside the European Unionstates that both corporations and financial entities have been involved in land grabbing outsideof the European Union. Appendix 1 lists 31 out of 321 land grabbing transactions involvingfinancial entities. Four of the transactions involved banks, and the remaining 27 involvedprivate equity and investment firms. Most of these firms have already commenced production.As at the date of this whitepaper, there are no reports of these entities being involved in illegaldeforestation, apart from the impacts of land grabbing to human rights, which is loss of accessto, and control over, the land and other natural resources.
Case Study 3: Plantation Companies and Financial Entities
Reputational risk is not only a risk to financial entities, but also a risk to be considered by allplantation and animal breeding companies. The question to be asked is if these companies’environmental crimes are not exposed by non-governmental organizations, such asGreenpeace, Chain Reaction Research, Rainforest Action Network, etc., then will these entitieskeep silent and continue their business as usual?
Palm Oil
Channel News Asia (CNA) on June 2, 2017 published a report, DBS, OCBC financedIndonesian palm oil firms engaged in unsustainable practices: Report,41 stating that twoSingaporean banks—DBS Bank and OCBC Bank—had financed Indonesian palm oilcompanies: Sampoerna Agro, IndoAgri/Salim, and Tunas Baru Lampung. Tunas BaruLampung has consistently scored around 25% in the Zoological Society of London’sSustainable Palm Oil Transparency Toolkit,42 which ranks companies on their practices based
41 https://www.channelnewsasia.com/news/singapore/dbs-ocbc-financed-indonesian-palm-oil-firms-engaged-in-890677242 https://www.spott.org/dashboard/#assessments
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on information the companies make public. Sampoerna Agro and IndoAgri/Salim scoredaround 43.9% and 69.8%, respectively. All three companies are members of the Roundtableon Sustainable Palm Oil (RSPO): an international group committed to sustainable palm oilpractices and transparency of production and procurement operations. When DBS Bank andOCBC Bank were contacted by CNA, the banks announced that they have recently updatedtheir approach to the palm oil sector, and that borrowers are being assessed on internal ESGrequirements. A summary of the financing details are as follows:
Companies Financial institutions AmountPalm Oil plantationsowned by Tunas BaruLampung
Sampoerna Agro,IndoAgri / Salim
Bank Mandiri, Bank RakyatIndonesia (BRI), and OCBC Bankfinanced Tunas Baru Lampung
DBS Bank, OCBC Bank, BankMandiri, BRI, Bank NasionalIndonesia (BNI), Rabobank, andDBS Bank financed PTSampoerna Agro where 900hectares of peatland was burnt
OCBC – IDR1.0 trillion;BRI – IDR0.6 trillion;Bank Mandiri – IDR0.5 trillion
OCBC Bank – IDR0.9 trillion;Bank Mandiri – IDR0.9 trillion;BRI – IDR0.7 trillion;BNI – IDR0.5 trillion;Rabobank – IDR0.3 trillion;DBS – IDR0.2 trillion
Table 4: Summary of financing of Tunas Baru Lampung, Sampoerna Agro, and IndoAgri/Salim
On another exposé by Mongabay, an environmental science and conservation news andinformation site, reported that two companies, PT Duta Rendra Mulya and PT SawitKhatulistiwa Lestari, linked to Anthoni Salim (an Indonesian billionaire) are deforesting a peatswamp in Borneo (April 11, 2018). In response to the findings, “Citibank stated that it wascancelling all lending agreements with IndoAgri, the Salim Group’s agribusiness arm, effectiveimmediately and conducting an investigation into its exposure to tainted palm oil through otherlines of credit offered to Indofood.”43 Other banks, such as Standard Chartered, HSBC,Rabobank, and DBS said they remained committed to sustainable palm oil policies and wouldreview lending arrangements where necessary.
Table 5 (not exhaustive) below shows that financial entities were connected with financingplantation companies in deforestation:
Date FinancialEntities
Financing Activities of End-Financier
20October2018
ABN AMRO,ING andRabobank44
ABN AMRO – 56 fundsRabobank 61 fundsING – 85 funds
Unwittingly investing indeforestation throughcontroversial palm oilcompanies
19 April2018
Citibank andRabobank45
PT Duta Rendra Mulya andPT Sawit Khatulistiwa Lestari
Deforestation for palm oilplantation
43 https://news.mongabay.com/2018/04/indonesian-billionaire-using-shadow-companies-to-clear-forest-for-palm-oil-report-alleges/44
https://www.banktrack.org/article/dutch_banks_allow_consumers_to_unwittingly_invest_in_controversial_palm_oil_companies45 http://www.aidenvironment.org/news/new-report-uncovers-one-of-the-largest-cases-of-illegal-rainforest-clearance-in-borneo-for-palm-oil-development/
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Date FinancialEntities
Financing Activities of End-Financier
17 January2017
HSBC46 Bumitama Agri Ltd. - PTKarya Bakti AgroSejahtera
Goodhope Group - PTNabire Baru
POSCO DaewooCorporation – PT Bio IntiAgrindo
Nobel Plantations – PTHenrison Inti Persada,and PT Pusaka AgroLestari
Salim Group – IsuyMakmur, KedangMakmui, PT Lonsum, andPT Gunta Samba Jaya
IOI Group – PT BerkatNabati Sejahtera, PTSukses Karya Sawit &Pelita
Deforestation in CentralKalimantan for oil palmplantation
Deforestation in PapuaNew Guinea for oil palmplantation
Deforestation in PapuaNew Guinea for oil palmplantation
Deforestation in NorthSumatra for oil palmplantation
Deforestation in WestKalimantan and Sarawakfor oil palm plantation
28 June2014
Rabobank47 Financing Bumitama AgriLtd amounting to Euro47million
Deforestation in Indonesiafor palm oil plantation
Table 5: Banks involved in financing companies in deforestation
Soy Bean Plantations
Brazil is now the second largest producer of soybeans (with 114.6 million metric tons) afterthe USA (119.5 million metric tons), with annual data released by FAOSTATS in 2017.48
Twenty-five years ago, Brazil was nowhere near the second largest producer of soybeans. Thiswas achieved through deforestation of the Amazon forest from the late 1990s until the SoyMoratorium was implemented in 2006, where major soy traders responsible for around 90% ofall soy sourced from Brazilian Amazon made a commitment not to purchase soy planted onland in the Amazon, deforested after 2008.
Even after the Soy Moratorium was in place, financial entities still financed local Braziliancompanies to plant soy in Amazonia. The old practices came to light when Spanish SantanderBank in Brazil was fined 47.5 million Brazilian reais (US$14.7 million) in 2016 for financingsoy plantations in protected areas of the Amazon.49 With the Soy Moratorium, soy bean
46 https://www.greenpeace.org/archive-international/Global/international/publications/forests/2017/Greenpeace_DirtyBankers_final.pdf47 https://www.dutchnews.nl/news/2014/06/rabobank_under_fire_over_indon/48 http://www.fao.org/faostat/en/#data/QC49 https://www.latinfinance.com/magazine/2018/march-april-2018/latin-american-banks-hone-socially-responsible-lending-policies
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plantation companies and traders have moved away from the Amazon area to the Cerrado areaof Brazil.
The level of deforestation in the Cerrado area versus the Amazonia area, since the SoyMoratorium, can be seen in the Diagram 7 below50 on the right.
Diagram 7: The level of deforestation in the Cerrado area versus the Amazonia area since the SoyMoratorium
The Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA)launched Operation Soy Sauce in April 2018, and this resulted in 105.7 million Brazilian reais(US$29 million) in fines to transnational soy commodities’ traders and farmers for illegaldeforestation in the Cerrado area. Five transnational commodities companies—Cargill Inc.,Bunge Ltd., ABC Indústria e Comércio SA, JJ Samar Agronegócios Eireli, and UniggelProteção de Plantas Ltda—were fined 24.6 million Brazilian reais (US $6.5 million) for buyingsoy grown on lands without deforestation licenses.51
Case Study 4: Illicit Wildlife Trade and Financial Entities
An APG-UNODC Wildlife Report states that “there was very little known about paymentmethods that are being used to transmit money along the trafficking chain. Where informationdid exist, this included cash and bulk currency smuggling via cash couriers, informal systemssuch as hawala or hundi systems, payments made via Western Union, prepaid cards and storedvalue cards, and Cryptocurrencies such as Bitcoin.”52 Such systems are commonly used byorganized transnational criminal groups to move funds. Many of the people arrested in wildlifetrafficking are individuals.
One case where a former Royal Canadian Mounted Police, Gregory Logan, was sentenced bya US court to five years and two months—for laundering money derived from smuggling morethan 250 Arctic narwhal tusks from Canada to the US—revealed how the ill-gotten gains weremoved. The modus operandi uncovered is as follows:
“Logan maintained a post-office box at the Ellsworth shipping store as well as anaccount at a bank in Bangor. Logan instructed his customers to send payment in
50 https://yearbook2018.trase.earth/chapter6/51 https://www.reuters.com/article/brazil-deforestation-bunge-carg/brazil-fines-5-grain-trading-firms-farmers-connected-to-deforestation-idUSL3N1ST5T752 Asia/Pacific Group on Money Laundering and United Nations Office on Drugs and Crime, Research Report: Enhancingthe Detection, Investigation and Disruption of Illicit Financial Flows from Wildlife Crime. (2017). pp. 20
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forms of checks to the post office box, or wire money directly to his Maine bankaccount. Logan will then transport the money to Canada by having the shippingstore forward his mail to him in Canada. Using the Automated Teller Machine(ATM) card to withdraw money from his Maine bank account at Canadian ATMmachines. At times Logan directed his customers to send finds directly to him inCanada.”53
The bank at Bangor was the Machias Savings Bank.54
The five cases were reviewed on the US Fish & Wildlife Service Office of Law Enforcementwebsite at https://www.fws.gov/le/stories.html55 and did not indicate the movement of fundsand payment methods.
Case Study 5: IUU Fishing—interviews with a former enforcement officer with the MalaysianFisheries Department and current executive at the Sabah Fisheries and Fishermen DevelopmentCooperative
“IUU is rampant in the Malaysian waters at the coast of Sabah amongst fishermen,” said Ms.Cabrini Chia,56 the current Assistant General Manager and Head of Development and Planningat the Sabah Fishermen & Fisheries Development Cooperative (SFFDC). She said that mostof the fishermen use different methods to catch fish, and one very popular illegal method is“fish bombing.” This method is inexpensive. All it requires is a bottle, some simple artificialchemicals derived from fertilizer, and a fuse to cause the bottle to explode. Once the bomb isthrown into the water, and the bottle explodes, the fish die or are stunned. The fish float up onthe water, and the fishermen simply collect them. The fish are then sold in the local wet market.
Mr Ganesan Vethiah,57 who was a former enforcement officer with the Department of Fisheriesof Malaysia (DOFM), said in a separate interview that even licensed fishing vessels can beinvolved in IUU fishing. The commercial fishing vessels can only be linked to a particularowner or company if the vessels are detained for fisheries-related offenses or throughcomplaints by traditional fishermen, fishing vessels below 40 Gross Registered Tonnage(GRT).58 Commercial fishing vessels are those with 40GRT and above. The information willbe recorded at the legal divisions of DOFM and Malaysian Maritime Enforcement Agency(MMEA), so that it can be accessed officially.
When asked who financed the purchase of fishing vessels, Chia59 said that most fishermencannot afford to purchase a fishing vessel. They will either obtain financing from the fishermencooperatives or rent/use the vessels from guaranteed buyers. Vethiah60 said some fishermenborrow from the development financial institutions to build their fishing vessels in accordance
53 https://www.justice.gov/opa/pr/former-canadian-mountie-sentenced-money-laundering-charges-stemming-conspiracy-smuggle-ivory54 https://bangordailynews.com/2017/09/20/news/bangor/ex-mountie-gets-5-years-2-months-for-role-in-narwhal-tusk-smuggling-case/55 Case 1: Virginia Shop Owner Guilty of Smuggling Protected Wildlife, dated December 19, 2018Case 2: Japanese Fishing Vessel Owner and Officers Charged with Shark Fin Trafficking, dated December 14, 2018Case 3: Texas Man Pleaded Guilty to Possessing a Protected Own dated November 26, 2018Case 4: Canadian National Sentenced for Importing an Unlawfully Harvested Trophy Moose dated October 24, 2018Case 5: Arizona Seafood Company Ordered to Pay US1.25 million for Wildlife Trafficking dated October 4, 201856 Excerpt from tele-conversation interview with Cabrini Chia. January 7, 2019. Kuala Lumpur, Malaysia57 Excerpt from in person interview with Ganesan Vethiah. December 7, 2018. Kuala Lumpur, Malaysia58 The Malaysian formula to compute GRT = (length of vessel x breadth x Depth) meters x 0.0282759 Excerpt from tele-conversation interview with Cabrini Chia. January 7, 2019. Kuala Lumpur, Malaysia60 Excerpt from in person interview with Ganesan Vethiah, December 7, 2018, Kuala Lumpur, Malaysia
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with the specifications by DOFM. He echoed what Chia said about renting and usage of vesselsfrom guaranteed buyers.
Chia61 said that many of these fishermen do not have a bank account and rely on cash derivedfrom the sales of the fish in the local wet market to maintain their daily operations and to feedtheir families. Vethiah62 confirmed that so far, there has been no prosecution for IUU fishing,and no financial entities have been involved in Malaysia.
ANALYSISBased on the research done, it is evident that financial institutions are involved in financingenvironmental crimes through corporations. Some reasons why:
Environmental crime is not considered to be a big money laundering threat. Financial institutions do not have a strong ESG policy and risk assessment. The understanding of ESG policy and the impact of financing environmental crime is
not understood by all lines of business and the credit department of the financialinstitutions.
No proper Customer Due Diligence (CDD) is conducted on the supply chain of thecompanies to determine the source of supply from cradle to grave.
Most financial institutions and companies react to negative news and exposés done bynon-governmental organizations (NGOs). They do not take the necessary action abinitio.
These crimes are very difficult to identify through the standard monitoring practicesused by financial institutions.
Many of the supply chains observed through research involve transnational organized crimewhere money can be made from illicit dealings. Professional organized criminal groups haveturned the illegal exploitation of wildlife,63 illegal logging, land grabs, and non-sustainableproductions of food into a professional business with lucrative revenues. As profit-drivenorganizations, criminal groups have exploited the vulnerabilities, gaps, and weaknesses in thelegislation and inadequate law enforcement across many jurisdictions in order for theirorganizations to prosper.64
The nature of transnational crimes through wildlife trafficking, ODS smuggling, illicit trade inhazardous wastes, IUU fishing, illegal logging, and deforestation means that these crimesinvolve breaches in quarantine (for flora, fauna, and wildlife products), customs, animal andforest protection, fisheries, and environmental and tax laws of the country. The complexity ofthe shipping routes, multiple and complex supply chains, different methods of concealment,and the sheer volume of these transactions indicate that the criminal groups involved are verywell organized to circumvent any loopholes in the domestic or international conventions set upto combat them.
Fraud, document forgery, mis-declaration, and concealment and corruption of manygovernment institutions are the major facilitators to environmental crimes—allowing
61 Excerpt from tele-conversation interview with Cabrini Chia. January 7, 2019. Kuala Lumpur, Malaysia62 Excerpt from in person interview with Ganesan Vethiah. December 7, 2018. Kuala Lumpur, Malaysia63 UNODC, Environmental Crime: The Trafficking of Wildlife and Timber. (2012)64 INTERPOL-UN Environment. (2016). Strategic Report: Environment, Peace and Security – A Convergence of Threats. p.40
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traffickers and smugglers to move products and goods across jurisdictions and internationalborders without detection.
This puts additional pressure on the financial institutions’ CDD process and the understandingof the business of their customers. Where there are weaknesses and gaps, environmentalcriminals will be onboarded, and illicit monies will flow through the bank accounts that havebeen opened by the financial institutions.
Environmental crimes also pose a significant threat to governance, rule of law, and nationalsecurity. An analysis from Poaching, Wildlife Trafficking, and Security in Africa: Myths andRealities, published by the Royal United Services Institute in 2016, states:
“As criminals undertake these activities, the networks they form and the endemiccorruption they engender progressively penetrate the state – the start of a slippery slopetowards the hollowing of national institutions. Governments that lack the capacity tocounter such penetration, or that submit to it, risk morphing into criminalized or‘captured’ states. In these states, development is held back, governance is undermined,and public trust in institutions is broken down.”
The analysis does not just apply to Africa, but also to all countries, governments, andorganizations that are involved in environmental crime.
CONCLUSIONSummary of the cases discussed above:
No Case Study Financial entitiesinvolved
Financing Amount Conclusion
1 Tokyo Olympics2020 – source oftimber from PTKorindo Group’ssubsidiary, PTKorintiga Hutaniwhich were sold toSumitomo Forestry.
SMBC Group, MizuhoFinancial Group andSumitomo Mitsui Trust.
US$45.2 million inrevolving creditfacility in 201865
Yes, financialentities were allegedto be financingdeforestation inIndonesia directlyand indirectly.
Bank Negara Indonesia,SMBC Group and JapanBank for InternationalCooperation.
US$40 million66
2 Land grabbing inBrazil by financialentities
Investors involved whichare capital assetmanagement companiesare Nuveen, BrookfieldAsset Management,Valiance Capital,Ridgefield Capital AssetManagement, AltimaPartners, Capital Groupwhich purchased1,101,020 hectares of landare involved in 230,691
Not applicable. Yes. financialentities which areasset managementcompanies didpurchase the landsand were alleged tobe involved indeforestation inBrazil.
65 http://forestsandfinance.org/66 RAN, WALHI, TuK Indonesia and Profundo. (2018). Broken Promises: A case study on how the Tokyo2020 Games. pp.9
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No Case Study Financial entitiesinvolved
Financing Amount Conclusion
hectares of deforestationsince year 2000.
Land grabbing byEuropeancompanies outsideEurope.
31 financial entities (4involved banks and 27involved private equityand investment firms) outof 321 entities listed inthe report by theDirectorate-General forExternal Policies PolicyDepartment of theEuropean Union wereinvolved in land grabbingactivities outside Europe.
Not applicable. Banks, private equityand investment firmswere involved inland grabbingactivities but nomention of anyillegal deforestationbeing mentioned orreported apart fromthe impacts of landgrabbing to humanrights.
3 PlantationCompanies andFinancial Entities –Palm Oilplantations ownedby Tunas BaruLampung.
Sampoerna Agro,IndoAgri / Salim.
Bank Mandiri, BankRakyat Indonesia (BRI),and OCBC Bank financedTunas Baru Lampung.
DBS Bank, OCBC Bank,Bank Mandiri, BRI, BankNasional Indonesia (BNI),Rabobank and DBS Bankfinanced PT SampoernaAgro where 900 hectaresof peatland was burnt.
OCBC – IDR1.0trillion;BRI – IDR0.6trillion;Bank Mandiri –IDR0.5 trillion
OCBC Bank –IDR0.9 trillion;Bank Mandiri –IDR0.9 trillion;BRI – IDR0.7trillion;BNI – IDR0.5trillion;Rabobank – IDR0.3trillion; andDBS – IDR0.2trillion.
Yes, the financialinstitutions werealleged to befinancingdeforestation inIndonesia directly.
Palm oil plantations– 2018.
ABN AMRO – 56 funds;Rabobank 61 funds;ING – 85 funds.
Not disclosed. Yes, the financialinstitutions wereunwittingly investingin deforestationthrough controversialpalm oil companies.
Citibank and Rabobankwere financing PT DutaRendra Mulya and PTSawit KhatulistiwaLestari.
Not disclosed. Yes, the financialinstitutions werefinancingdeforestation forpalm oil plantation.
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No Case Study Financial entitiesinvolved
Financing Amount Conclusion
Soya beanplantations.
Santander Bank was fined47.5 million Brazilianreais in 2016 for financingsoy plantation inprotected areas of theAmazon.
Not disclosed. Yes, the financialinstitutions werefinancing soyplantation inprotected areas of theAmazon.
4 Illicit wildlife trade. A former Royal CanadianMounted Police wassmuggling protectednarwhal tusks and wassentenced to 5 years and 2months jail for launderingmoney through MachiasSavings Bank.
Not disclosed. Cannot bedetermined as thereis very littleinformation aboutillicit wildlife andfinancial institutionscases. In this case,the financialinstitution wasfacilitating themoney launderingtransaction.
5 IUU fishing. Financing of boats andfishing operations wereusually obtained fromfishermen cooperatives.
Not applicable. Cannot bedetermined as thereis limited or noinformation about thefinancing of IUUfishing.
The findings indicate that financial institutions in certain cases are involved directly andindirectly in financing corporations in the perpetration and proliferation of environmentalcrime.
This paper also finds that environmental crime is not only a serious offense, but has adeleterious impact on the environment, wildlife, and human beings. It depletes the ozone layer,and this causes atmospheric warming, extinction of certain animals, adverse climatic changes,and the pollution of rivers and seas that affect marine life and humankind.
When environmental crime has been ratified and gazetted as a predicate crime in all UNcountries, it is hoped that concerned parties play their parts in combating environmentalcrime—the duty of global citizens of Earth.
All public and private organizations, including financial institutions, have this duty to protectthe environment. Financial institutions can do so through strict enforcement of their AMLpolicies on Know Your Customer, Customer Due Diligence, and Enhanced Due Diligencewhere circumstances demand.
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RECOMMENDATIONS TO FINANCIAL INSTITUTIONS AND ENTITIESFinancial institutions and entities play a big role in the prevention of environmental crimes. Inthis connection, the following recommendations are propounded for consideration foradoption, compliance, and implementation.
Recognize Environmental Crime as a Financial Crime in PoliciesFinancial institutions and entities should recognize that environmental crime is a financialcrime. They should formulate and adopt not only policies on sustainability, but also againstenvironmental crimes. These policies should transcend to all lines of business and percolate toall departments, including the credit department, as most financial institutions assess financialcrime risk and credit risk separately.
Tone from the TopTone from the Top is critical to ensure these policies are adopted properly and are congruentthrough middle management and the people at the bottom. Therefore, the role of the secondline of defense and the third line of defense is important to ensure congruency in all lines ofbusiness and credit when top management adopts sustainable and financialcrime/environmental crime policies.
Build Human Capital and Capacity on Financial Crime InvestigationIt is important to build human capital and capacity in the areas of financial crime investigation,financial crime analysis, and the ability to track and trace financial flows techniques throughconstant education. Provision of Information Technology (IT) tools for mapping linkages andfinancial flows, and data analytics tools to help in this investigation, are recommended.
Employing former law enforcement officers is a common practice among financial institutionsthat want to beef up their financial crime and anti-money laundering investigation teams.Financial institutions should also consider those with environmental crime knowledge, such asthe fisheries, wildlife, and forestry departments, as well.
Financial institution investigators must be educated and know the common modus operandiand the different schemes involved in environmental crimes. Working and cooperating withlaw enforcement agency officers is important to ensuring that the necessary and completeinformation is provided without prejudice for successful prosecutions.
Some of the tools and resources are listed in Appendix 2.
Work with Environmental Non-Profit Organizations (NPO) and NGOsCollaborate with environmental NPOs and NGOs that are passionate about protecting theenvironment from further destruction. Financial institutions can learn from these NPOs/NGOsand supra-organizations, such as the United Nations, World Wildlife Fund (WWF), RainforestAction Network (RAN), UNODC, UNEP, INTERPOL Environmental Crime Programme, etc.
Both the NPO/NGO and financial institutions can collaborate and work together to developsound environmental, sustainable, and governance polices where there will be a win-win-winsituation. Most important is the buy-in from all stakeholders to ensure the success in theimplementation of these policies.
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Develop High-Risk Indicators and Typologies
Financial institutions should make a deeper commitment to developing high-risk indicators andinternal typologies to help their respective lines of business identify environmental crimes.One way to develop this is to have a task force for all the banks in the respective countries toput in resources to develop and update the indicators and typologies specifically for therespective lines of business.
Working collectively as a group, or through the initiative of the law enforcement agency (LEA)or the government department in charge of the environment, should be encouraged to identifyand analyze trends and to develop typologies and the respective red flags that can help financialinstitutions. These will help all reporting institutions, including financial institutions, asrequired by law, to file any Suspicious Transaction Reports (STR) or Suspicious ActivityReports (SAR) to the competent authorities or Financial Intelligence Units (FIU) on any riskof facilitation of illegal activity, transactions, or proceeds of environmental crimes.
An example of a typical typology and a checklist of high-risk indicators for wildlife trade thatcan be used by a financial institution:
Typology of Wildlife Trade
Transit Jurisdiction
The transit jurisdiction is normally border countries to the sourced jurisdiction. Make sureyou have a world map to determine whether the wildlife products are using the transitjurisdiction to export the products to the destination jurisdiction.
Regional facilitators, brokers, and international traders are usually shell companies used toreceive and send the illicit wildlife products to the destination jurisdiction.
Wildlife Uses SourcedJurisdiction
DestinationJurisdiction
Elephant ivory Ornaments like rings,bangles made fromivory
Africa (Sudan, Chad,Niger), Myanmar,Thailand
China
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Wildlife Uses SourcedJurisdiction
DestinationJurisdiction
Rhino Horns Traditional medicineto cure cancer
Africa (Zimbabwe,South Africa), India,Nepal
China and Vietnam
Bear bile and gallbladders
Used commonly intraditional medicine inEast Asia
China, Japan, Laos,Myanmar, Republicof Korea andVietnam
South East Asia,Hong Kong,Taiwan,
Pangolin Used for traditionalmedicine and “luxury”food
Africa, South EastAsia
China, Hong Kong,Taiwan, andVietnam
Orchids Traditional medicine Thailand Singapore, China
Tiger meat, skin,reproductive parts,and other parts
Traditional medicineand luxury food
Europe China (Food andTraditionalMedicine)
Questions to Ask Before Onboarding and High-Risk Indicators
High Risk IndicatorsOnboarding Questions to ask
Have we determined whether the customer is affiliated with thewildlife supply chain;
Have reasonable measures been taken to establish the source of wealthand source of funds of the customer;
Conduct enhanced ongoing monitoring of the business relationship; Always verify the identity of the customers; Take steps to identify and verify the beneficial owners of funds
deposited to high-value accounts.
Indicators Wildlife crimes are often alter ego companies of legitimate
businesses67. Financial institutions should be aware of legal entitiesoperating in environment or natural resource fields, antique orfurniture trade, or transport logistics provider and should conductadditional due diligence measures.
APG-UNODC Wildlife Report recommends some examples of theproducts that the above-mentioned businesses are usually in thesupply or manufactory of forestry products, hunting, exotic/wildanimal keeping or breeding, traditional medicine, animal bonecarving, furs/skins for the fashion industry, restaurants that serve
67 https://www.bbc.com/news/world-africa-47294715
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High Risk Indicatorsexotic foods or shipping, trucking, container-leasing, warehousingcompanies.
Be aware of the general scale of the customers legitimate operationsand be properly suspicious when transactions are conducted that areabnormal from the client’s normal, legitimate business operations.
Usage of shell companies to serve as shipping agents to send andreceive illicit wildlife products.
Payment Methods Payments are usually in cash. Look out for high local cash depositswhich is not within the normal customer historical cash transactionsthresholds of the business;
Cash payments deposited not within the usual bank branches;
Wildlife trade involve multi-jurisdictions and payments will involvedifferent currencies. Look out for transfer or cash deposits fromdifferent countries which is not within the normal course of thebusiness.
Deposits from money services business such as Western Union orMoney Gram or informal alternative remittance systems such ashawala or hundi systems are commonly used to pay individuals.
Deposits from crypto-currency exchanges. Many wildlife criminalshave resorted to Bitcoin or other crypto-currency as a form ofpayment.
Payment Routes Most of the wildlife products are sourced from Africa and South EastAsia. Most of the environment criminals will require payments inU.S. dollars or Euro as they are international currencies. As suchbanks with correspondent-respondent banking relationships have toensure that the respondent banks have made environment crimes aspart of financial crime definition and have the required policies todetect environmental crimes.
This may suggest that illicit wildlife trade transactions may beclearing through the U.S. and European financial systems.
Payment Behavior The transaction is not consistent with the customer’s normaloperations or business;
The transaction based on the contract or agreement obtained from thecustomer does not appear to be an economically viable transaction;
Payment to third parties with no apparent connection to thetransaction;
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High Risk Indicators
Fraudulent or insufficient information on customs and shippingdocuments;
High rate of amendments and discrepancies between the descriptionor the value of the product in the Customs and Shipping documentsand the invoice, versus the actual goods shipped;
Multiple cash deposits and withdrawals which is not within theunderstanding of the nature of business of the customer;
When enquired on the source of funds, the customer is evasive or doesnot know;
Small cash deposits from various locations are then aggregated with aone bullet payment of equivalent amount to an unrelated third party.
Conducting Proper Understanding of the Customers’ Business
All relationship managers shall need to understand the customers’ business. This includes theirsupply chain all the way up to the end user. This is to ensure that there is no illegality on thesource of raw materials or ingredients from vendors. A list of all their vendors that supplyproducts or services; and all their customers and end-users that purchase products and services,should be obtained. Sanctions and negative news screening should be carried out to ensure thatthese companies are not involved, or allegedly involved, in any environmental crimes.
RECOMMENDATIONS TO REGULATORS & LAW ENFORCEMENT AGENCIESRecognize Environmental Crimes as a Predicate Offense to Money Laundering
Domestic environmental crime laws should be gazetted as a predicate offense under the AMLlaw of the land. In cases where domestic environmental crime laws have yet to be enacted orwhere they are yet to be a predicate offense, a legislative reform would be recommended andinitiated.
Build Capacity on Financial Crime Investigation
LEA officers have all been trained in mostly blue-collar crimes investigations. White collarinvestigation trainings have been on the rise, but only to special units within law enforcementagencies. Most of these trainings are for the domestic or in-country.
Building cross-border networks and knowledge on how and when to use the Mutual LegalAssistance Treaties are paramount, especially when environmental criminals capitalize onloopholes in legislations of different jurisdictions.
Public prosecutors must be empowered with the techniques to source financial information toensure that the prosecution covers all those who are involved, such as the recipient, thefacilitators, and the beneficiaries.
Some of the tools and resources are listed in Appendix 2.
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Conduct Concurrent Investigations in the Respective Jurisdiction
The relevant law enforcement agencies should commence investigations, should there beseizures of wildlife, fauna, or flora products, IUU fishing, deforestation, or ODS smuggling ortrafficking of hazardous waste reported in other countries. Consistent with FATF’sRecommendation 30’s Operational Issues – Financial Investigations Guidelines, published in2012,68 parallel investigations should be conducted in respective jurisdictions to “enquire intothe financial affairs related to the criminal conduct… to identify and document the movementof the proceeds of crime during the course of criminal activity... the link between the originsof the money, beneficiaries, when the money is received and where it is stored or deposited canprovide information about and proof of criminal activity.” The sharing of intelligence betweenLEAs is paramount to providing additional evidence on the wider criminal network and helpingto locate all the ill-gotten gain. Verification of the Source of Funds (SOF) should be conductedto ensure that the proceeds of crime are not used to pay fines or bails.
Freeze, Seize, and Confiscate Assets
FATF Recommendations 4 and 3869 address the areas of freezing, seizing, and confiscatingassets derived from ill-gotten gains. These measures should be used to disrupt their operationsand also to deny the environmental criminals the proceeds of crime. These methods employedcan be used as a deterrent for environmental criminals to reuse and to reinvest them into furtherenvironmental crimes.
Countries that have not ratified their legislation must initiate a regulatory reform to include thefreeze, seizure, and confiscation of the proceeds derived from environmental crimes as part oftheir anti-money laundering legislation and other environmental-related legislations. Themandate given to Customs Agency Officers to seize and confiscate the physical products, andthe mandate given to police or any law enforcement agencies to freeze the proceeds derivedfrom sales of these products, must be used fairly and transparently.
Working With Environmental NGOs/NPOs and Stakeholders
LEAs should adopt an open-door policy and an open mind when working with NGOs/NPOs.Without a doubt, many NPOs/NGOs’ reports and findings are for lobbying for certainunderlying agendas, or have hidden political agendas. LEAs must look beyond these agendasto actually work with NPOs/NGOs.
NGOs must also provide assistance to LEAs if cases are brought for investigation. Sources offinancial and non-financial information are gathered as a result of writing reports or exposés.The respective NPOs/NGOs should help analyze trends, engage in court room monitoring, andbe present, should there be any seizures or confiscation done on any products sourced fromillegal wildlife, timber, or fish. Representatives of NPOs/NGOs should be present during thedestruction of the illegally sourced products.
NPOs/NGOs can also lobby with the respective governmental departments to initiate changesat policy and legislative levels around environmental crimes being predicate offenses, to helpin awareness campaigns, help financial institutions and corporate entities at drafting
68 Operational Issues – Financial investigations Guidance. (2012.) FATF & OECD. pp. 3 & 969 FATF. (2010): A list of selected sources for financial investigation with complete bibliographic information is included atthe end of this report.
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environmental, sustainable, and governance policies, and to ensure financial transparency inthe local and international financial system.
Working with NPOs/NGOs, financial institutions, and other stakeholders can also help theLEAs develop high-risk indicators and typologies as part of their public-private initiatives tocombat environmental crimes. This will require cooperation and flexibility from allstakeholders in relation to information sharing, trends, typologies, sanitized financialinformation, and updating information. The information compiled can later be shareddomestically among all LEAs, and cross-border to other jurisdictions, to help capacity buildingin this area.
Inter-LEA Collaboration and Cooperation
One of the ways to obtain evidence to prosecute money laundering crime is to “follow themoney.” This method will require collaboration and cooperation between government forestry,wildlife, fisheries, and environmental agencies, police, customs, immigration, maritimeagencies, FIUs, asset recovery agencies, and the public prosecutors to ensure sufficientevidence is obtained prima facie to seize, freeze, and confiscate and disrupt the modus operandiof the environmental criminals.
Memorandum of Understanding and Service Level Agreements can be signed to ensure that allparties play their roles to help fight environmental crime.
Mutual Legal Assistance Treaties (MLAT)
Ensure that the public prosecutors have MLATs formalized with countries whereenvironmental crime risks are high, based on the National Risk Assessment. This is to ensurefree sharing of information both formally and informally (through FIUs) on the source ofsupply, the transiting entities, or countries and source of demand. The sharing of thisinformation will help in expediting the collection of data, information, and intelligence to helpin the successful prosecution of environmental criminals in the prosecuting country.
Fighting Corruption as a Key Enabler
Corruption is one of the key enablers for environmental criminals to succeed. Freezing,seizing, and confiscation on the proceeds of crime is a critical tool that LEAs can use to disruptcorrupt moneys that flow from the environmental criminals to the corrupt recipients. Anti-corruption agencies must follow the money as part of the routine to identify the corrupt giverand recipient. The advantage of using this method may extend beyond environmental crime.The corrupt giver may be a facilitator to multiple financial crimes.
Use Different Legislations to Ensure Disruption
LEAs should be equipped with knowledge of various legislations to disrupt their modusoperandi of environmental crime offenders through freezing, seizing, and confiscation ofproducts. Public prosecutors should leverage on anti-money laundering legislation tosuccessfully prosecute environmental criminals.
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GLOSSARY OF TERMS
Term Description
EnvironmentalCrimes
Environmental crimes are defined as “illegal acts which directly harmthe environment. They include: illegal trade in wildlife in contravention to the Convention on
International Trade in Endangered Species of Fauna and Flora(“CITES”),
smuggling ozone-depleting substances (“ODS”) in contravention tothe Montreal Protocol on Substances that Deplete the Ozone Layer(a protocol to the Vienna Convention for the Protection of the OzoneLayer) (“Montreal Protocol”);
illicit trade in hazardous waste in contravention of the 1989 BaselConvention on the Control of Transboundary Movement ofHazardous Wastes and Other Wastes and their Disposals (“BaselConvention”);
illegal, unregulated, and unreported fishing in contravention to therespective local and regional fisheries management organisation; and
illegal logging and the associated trade in stolen timber in violationof the respective countries national laws. ”70
IUU Fishing Illegal, Unregulated and Unreported Fishing. The definitions are asfollows:71
Illegal fishing is fishing that violates national laws or internationalobligations.
Unreported fishing is fishing that has not been reported, or has beenmisreported to the relevant national fisheries authority.
Unregulated fishing is fishing by vessels under the flag of a country theyare not part of, or not part of a fishery organisation and fishing outsideof regulated zones, breaking international law to conserve living marineresources.
Land Grabbing72 Land grabbing is the control - whether through ownership, lease,concession, contracts, quotas, or general power - of larger than locally-typical amounts of land by any persons or entities - public or private,foreign or domestic - via any means - ‘legal’ or ‘illegal’ - for purposesof speculation, extraction, resource control or commodification at theexpense of peasant farmers, agroecology, land stewardship, foodsovereignty and human rights.
Basel Convention 1989 Basel Convention on the Control of Transboundary Movement ofHazardous Wastes and Other Wastes and their Disposals
70 https://www.unodc.org/documents/NGO/EIA_Ecocrime_report_0908_final_draft_low.pdf71 https://www.greenpeace.org/archive-international/en/campaigns/oceans/pirate-fishing/Blacklist1/About-the-blacklists/Definition-of-IUU-fishing/72 http://www.eurovia.org/wp-content/uploads/2016/11/defining-land-grabs.pdf
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Term Description
Montreal Protocol Montreal Protocol on Substances that Deplete the Ozone Layer (aprotocol to the Vienna Convention for the Protection of the OzoneLayer)
Financial Institutions FATF defines financial institutions to mean:
any natural or legal person who conducts as a business one or more ofthe following activities or operations for or on behalf of a customer:
a) Acceptance of deposits and other repayable funds from thepublic (includes private banking).
b) Lending (This includes inter alia: consumer credit; mortgagecredit; factoring, with or without recourse; and finance ofcommercial transactions (including forfeiting).
c) Financial leasing (This does not extend to financial leasingarrangements in relation to consumer products).
d) Money or value transfer services (It does not apply to any naturalor legal person that provides financial institutions solely withmessage or other support systems for transmitting funds. See theInterpretive Note to FATF Recommendation 16.).
e) Issuing and managing means of payment (e.g. credit and debitcards, cheques, traveller's cheques, money orders and bankers'drafts, electronic money).
f) Financial guarantees and commitments.
g) Trading in:
i. money market instruments (cheques, bills, certificates ofdeposit, derivatives etc.);
ii. foreign exchange;
iii. exchange, interest rate and index instruments;
iv. transferable securities;
v. commodity futures trading.
h) Participation in securities issues and the provision of financialservices related to such issues.
i) Individual and collective portfolio management.
j) Safekeeping and administration of cash or liquid securities onbehalf of other persons.
k) Otherwise investing, administering or managing funds or moneyon behalf of other persons.
l) Underwriting and placement of life insurance and otherinvestment related insurance. This applies both to insurance
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Term Description
undertakings and to insurance intermediaries (agents andbrokers).
m) Money and currency changing.
We will use the definition of financial institutions from FATF andinclude pension funds, private equity funds, asset managementcompanies and endowment funds.
RAN Rainforest Action Network (RAN) is a US-based NGO which preservesforests, protects the climate and upholds human rights by challengingcorporate power and systemic injustice through frontline partnershipsand strategic campaigns.
TuK Indonesia TuK INDONESIA is an Indonesian NGO which seeks the realisation ofrespect, protection and fulfilment of human rights and social justice byState and non-state actors in the fields of policies, programmes andactivities of agribusiness and natural resources management
WALHI WALHI is the largest and oldest environmental advocacy NGO inIndonesia, with independent offices and grassroot constituencies locatedin 28 of the nation’s 34 provinces. WALHI works on many issuesincluding agrarian conflict over access to natural resources, Indigenousrights, and deforestation
Profundo Profundo is an independent not-for-profit company based in theNetherlands which provides fact-based research and advice oninternational commodity chains, the financial sector, policydevelopments and the impacts of businesses and financiers on all aspectsof sustainability.
Money Laundering Money laundering is defined as:73
i. the conversion or transfer of property, knowing it is derived froma criminal offense, for the purpose of concealing or disguising itsillicit origin or of assisting any person who is involved in thecommission of the crime to evade the legal consequences of hisactions.
ii. the concealment or disguising of the true nature, source location,disposition, movement, rights with respect to or ownership ofproperty knowing that it is derived from a criminal offense.
iii. the acquisition, possession or use of property, knowing at thetime of its receipt that it was derived from a criminal offense orfrom participating in a crime.
Money laundering usually involves a complex series of transactions aredifficult to separate. It comprises of three stages:74
73 Article 6. (November 15, 2000). UN Convention Against Transnational Organized Crime.74 ACAMS: “Risks and Methods of Money Laundering and Terrorist Financing.” 5th Ed. pp. 17-18
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Term Description
Placement – introduction of proceeds of crime to the financialsystem;
Layering – involves carrying out complex financial transactionsto mask the proceeds of crime; and
Integration – converting the “cleaned” proceeds through layeringto personal or legal person’s wealth.
Financing The definition of financing as defined by the American HeritageDictionary75 is:
o the act of providing or raising funds or capital;o the funds or capital provided by investors or lenders.
The definition of financing by Random House Dictionary76 is:o the act of obtaining or furnishing funds for an enterprise;o the funds so obtained.
The definition of financing by Collins Dictionary77 iso the provision of funds for an operation, project etc;o the company’s financing decisions;o money received or provided to finance something.
With the definitions listed above, we shall use a combined definition offinancing which reads:
o the act of providing, raising, obtaining or furnishing funds orcapital to an enterprise, an operation, project, etc.;
o the funds, capital or funds so obtained provided by investors orlenders;
o the act of being a shareholder(s) of an enterprise by providingfunds for investment, operations, project, etc.;
o the facilitation which includes approving, financing,guaranteeing and facilitation of any financial transactions, and
o money received or provided to finance an enterprise, anoperation, project, etc.
75 American Heritage® Dictionary of the English Language, Fifth Edition. Copyright © 2016 by Houghton Mifflin HarcourtPublishing Company. Published by Houghton Mifflin Harcourt Publishing Company.76 Random House Kernerman Webster's College Dictionary, © 2010 K Dictionaries Ltd. Copyright 2005, 1997, 1991 byRandom House, Inc. All rights reserved77 Collins English Dictionary – Complete and Unabridged, 12th Edition 2014 © HarperCollins Publishers 1991, 1994, 1998,2000, 2003, 2006, 2007, 2009, 2011, 2014
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APPENDIX 1
EXTRACTED FROM DIRECTORATE-GENERAL FOR EXTERNAL POLICIES POLICY DEPARTMENT OF THE EUROPEANUNION REPORT IN 2016, “LAND GRABBING AND HUMAN RIGHTS: THE INVOLVEMENT OF EUROPEAN CORPORATE ANDFINANCIAL ENTITIES IN LAND GRABBING OUTSIDE THE EUROPEAN UNION
Investing Country Investing Company TargetCountry
Domestic PrimaryInvestor
Intention Deal Status Size of Land Nature of Deal
United Kingdom Deutsche Bank Ag,London
Peru Camposol S.A. Agriculture, FoodCrops
[2006] Concluded(Contract signed);[2006] Startup phase(no production)
unknown [intended size];3.778 ha [contract size]
Outright purchase
United Kingdom Deutsche Bank Ag,London
Peru Camposol S.A. Agriculture, FoodCrops
[2003] Concluded(Contract signed);[2003] In operation(production)
unknown [intended];7.700 ha [contract]
Outright purchase;exploitation license
Luxembourg Clearstream BankingS.A.
Peru Camposol S.A. Agriculture, FoodCrops
[2006] Concluded(Contract signed);[2006] Startup phase(no production)
unknown [intended];3.778 ha [contract]
Outright purchase
Luxembourg Clearstream BankingS.A.
Peru Camposol S.A. Agriculture, FoodCrops
[2003] Concluded(Contract signed);[2003] In operation(production)
unknown[intended];3.200 ha[contract 2005]; 7.700 ha[contract 2007]
Outright purchase;exploitation license
United Kingdom Solvia InvestmentManagement
Paraguay CalyxAgro Agriculture, Foodcrops, Conservation
[2008] Concluded(Contract signed);[2008] In operation(production)
unknown [intended size];2.859 ha [contract size];760 ha [in production2008]
Outright purchase
United Kingdom Solvia InvestmentManagement
Argentina CalyxAgro Agriculture, Foodcrops,
[2013] Concluded(Contract signed);[2013] In operation(production)
unknown [intended];1.082 ha [contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Argentina CalyxAgro Agriculture, FoodCrops, Livestock
[2013] Concluded(Contract signed);[2013] In operation(production)
unknown[intended];3.365 ha[contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Argentina CalyxAgro Agriculture, FoodCrops, Livestock
[2013] Concluded(Contract signed);
unknown [intended];4.638 ha [contract]
Outright purchase
43
Investing Country Investing Company TargetCountry
Domestic PrimaryInvestor
Intention Deal Status Size of Land Nature of Deal
[2013] In operation(production)
Italy DevelopmentAgroindustrialInvestment SPA
Mozambique Unknown (CompanyAgro Social IgoSammartini)
Agriculture [2010] Concluded(Contract signed);Startup phase (noproduction)
20.000 ha [intended];3.000 ha [contract]
Lease / Concession
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Paraguay CalyxAgro Agriculture, Foodcrops, Conservation
[2008] Concluded(Contract signed);[2008] In operation(production)
unknown [intended];2.859 ha [contract
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Argentina CalyxAgro Agriculture, Foodcrops
[2013] Concluded(Contract signed);[2013] In operation(production)
unknown [intended];1.082 ha [contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Argentina CalyxAgro Agriculture, Foodcrops, Livestock
[2013] Concluded(Contract signed);[2013] In operation(production)
unknown [intended];3.365 ha [contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Argentina CalyxAgro Agriculture, Foodcrops, Livestock
[2013] Concluded(Contract signed);[2013] In operation(production)
unknown [intended];4.638 ha [contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Uruguay CalyxAgro Agriculture, Foodcrops, Livestock
[2008] Concluded(Contract signed);[2008] In operation(production)
unknown [intended];1.010 ha [contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Uruguay CalyxAgro Agriculture, Foodcrops, Livestock
Concluded (Contractsigned); In operation(production)
unknown [intended]; 611ha[contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Uruguay CalyxAgro Agriculture, Foodcrops, Livestock
[2009] Concluded(Contract signed);[2009] In operation(production)
unknown [intended]; 708ha[contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Uruguay CalyxAgro Agriculture, Foodcrops, Livestock
Concluded (Contractsigned); In operation(production)
unknown [intended];1.659 ha [contract]
Outright purchase
44
Investing Country Investing Company TargetCountry
Domestic PrimaryInvestor
Intention Deal Status Size of Land Nature of Deal
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Brazil CalyxAgro Agriculture Concluded (Contractsigned); [2013] Inoperation (production)
unknown [intended];7.786 ha [contract]
Outright purchase
France, Switzerland Louis Dreyfus GroupPictet Private EquityInvestors
Brazil CalyxAgro Agriculture, Foodcrops
Concluded (Contractsigned); [2009] Inoperation (production)
unknown [intended];10.853 ha [contract];8.637 ha [in production2009]
Outright purchase
Netherlands FIAM N.V – ForestryInvestment and AssetManagement N.V.
Brazil RDFEmpreendimentosImobiliários Ltda
Forestry for wood andfibre
[2007] Concluded(Contract signed);unknown current status
unknown [intended];40.000 ha [contract]
Outright purchase
Denmark I.D.C Investment Ethiopia Unknown Agriculture, Biofuels Concluded (Contractsigned); [2007] Inoperation (production)
unknown [intended size];15.000 ha [contract size]
Unknown
United Kingdom Herdon Investments Zambia Unknown Agriculture, Foodcrops
[2003] ConcludedContract signed); Inoperation (production)
unknown intended]; 650ha [contract]
Lease / Concession
United Kingdom Solvia InvestmentManagement
Uruguay CalyxAgro Agriculture, FoodCrops, Livestock
[2008] Concluded(Contract signed);[2008] In operation(production)
unknown [intended];1.010 ha [contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Uruguay CalyxAgro Agriculture, FoodCrops, Livestock
Concluded (Contractsigned); In operation(production)
unknown [intended]; 611ha[contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Uruguay CalyxAgro Agriculture, FoodCrops, Livestock
[2009] Concluded(Contract signed);[2009] In operation(production)
unknown [intended]; 708ha[contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Uruguay CalyxAgro Agriculture, FoodCrops, Livestock
Concluded (Contractsigned); In operation(production)
unknown [intended];1.659 ha [contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Brazil CalyxAgro Agriculture Concluded (Contractsigned); [2013] Inoperation (production)
unknown [intended];7.786 ha [contract]
Outright purchase
United Kingdom Solvia InvestmentManagement
Brazil CalyxAgro Agriculture, Foodcrops
Concluded (Contractsigned); [2009] Inoperation (production)
unknown [intended];10.853 ha [contract];
Outright purchase
45
Investing Country Investing Company TargetCountry
Domestic PrimaryInvestor
Intention Deal Status Size of Land Nature of Deal
8.637 ha [in production2009]
United Kingdom Solvia InvestmentManagement
Brazil CalyxAgro Agriculture, FoodCrops
[2008] Concluded(Contract signed);[2008] In operation(production)
unknown [intended];8.758 ha [contract]; 6.745ha [in production 2008]
Outright purchase
United Kingdom Cru Investments Malawi Unknown Agriculture, FoodCrops
[2009] In operation(production); [2010]Failed (Contractcancelled); [2010]Project abandoned
unknown [intended];2.321 ha [contract]
Unknown
Netherlands ING Cambodia Unknown (AZ Group,Daun PenhConstruction Group,ING, SMEC)
Other [2011] Concluded(contract signed);[2014] in operation(production)
Unknown [intended];2572 ha (contract); 341ha (in production 2014)
Lease / Concession
46
APPENDIX 2
TOOLS AND RESOURCES AVAILABLE TO HELP AML INVESTIGATIONS UNITSIN FINANCIAL INSTITUTIONS AND LAW ENFORCEMENTWebsites
www.unenvironment.org – general information about environmental crimes andupdates
www.unodc.org – provides information on environmental crimes and typologies. www.wems-initiative.org – Wildlife Enforcement Monitoring System initiated by
Asian Institute of Technology and AIT Technologies www.profundo.nl – an independent NPO to help on all sustainability aspects forest500.org – rainforest rating agency. Identifies most influential companies,
financial institutions, and governments in forest risk commodity supply chains as theworld moves to a deforestation-free-economy
www.iucnredlist.org – lists all animals, flora and fauna that is on the threatened red list www.fao.org – Food and Agriculture Organisation of the United Nations www.iuufishing.noaa.gov – information on IUU fishing www.ran.org – Rainforest Action Network based on United States of America ForestsandFinance.org – website that highlights the role that finance plays in enabling
tropical deforestation