Anti Money Laundering as a way to limit environmental crimes

Environmental crimes pose a serious threat to our daily life, the environment, and the welfare of future generations.

Environmental crime is an illegal act which directly harms the environment and encompasses a wide range of actions that endanger the environment, human health, or both. Its defining characteristic is having an impact on the environment. This impact is visible in rising pollution levels, deterioration of the wildlife, decline in biodiversity and disruption of the ecological equilibrium.

Environmental crimes are not victimless. The harm they cause to ecosystems increases the risk of sickness, environmental catastrophe and irreversible climate change. It also lowers life expectancy and increases the probability of human death.1

This type of crime is a growing issue. After drug trafficking, human trafficking and counterfeiting, it is the 4th largest illegal activity in the world, according to Interpol and the United Nations Environment Programme.

In general, the most common types of environmental crimes are:

Wildlife crime - which can be understood as illegal trading in endangered species

Illegal mining - smuggling of ozone-depleting substances

Pollution crimes - illegal trading in hazardous materials and trash disposal

Illegal fishing - fishing that is unreported, unregulated, and unlawful

Illegal logging and trafficking in stolen timber

As environmental crimes are a growing concern, an urgent need exists to make criminal law more effective at protecting the environment. Independent countries as well as international organizations are implementing new laws in order to combat climate change and environmental degradation as it poses a real threat to the world.

Environmental crimes have also been recognized as posing a risk of money laundering.

According to the Financial Action Task Force (FATF), such acts are a very lucrative criminal activity that produce between USD 110 and 281 billion in illegal revenues per year. They also cause the loss of tax revenues of the countries. Only for illegal logging it is estimated to total between USD 6 and 9 billion per year.3

As a way to combat this type of illegal activity and it’s ML/TF risk, environmental crime has been added to the list of predicate offenses for money laundering in European Union 6th Directive on Anti-Money Laundering, which is the latest in a series of legislative efforts by the EU to harmonize and enhance the bloc’s ability to tackle financial crime within and across member states.4

Increasing amount of environmental crimes has several reasons. 

Firstly, as the majority of illegal activities, environmental crime brings huge financial profit. Financial flows from this kind of crime are estimated to amount to hundreds of billions of dollars per year: illegal wildlife trade 7–23 billion USD, forestry crimes 51–152 billion USD, illegal fisheries 11–24 billion USD, Illegal mining 12–48 billion USD; waste 10–12 billion USD.5

Secondly, this type of crime is relatively low-risk due to lack of financial scrutiny and low penalties in this domain.6 In the financial sector there is still low awareness of the connection between this type of crime and ML/TF and, as a result, only few financial institutions have methods to counteract the financial activities connected to green crimes.7 There have also been very few financial investigations in this matter historically.6


Environmental crimes as illegal acts are not a new topic. However, there are still insufficient preventive measures that could have significantly limited their impact.

We can observe that the situation has begun to change in the last few years and the organizations operating in the Anti-Money Laundering and Counter-terrorist financing sector (AML/CFT) have started implementing the necessary tools and actions.

As an example, in 2022 the Basel AML Index added environmental crime data to its indicators of money laundering and terrorist financing.8 This indicator has 5% weighting and is based on the Global Organized Crime Index, measuring risks connected to environmental crimes and first published in 2021.9

FinCEN (Financial Crimes Enforcement Network), also in 2021, issued a notice titled “FinCEN Calls Attention to Environmental Crimes and Related Financial Activity” where the environmental crimes were described and required to be reported.10


Environmental crimes are usually mixed with legal activities to hide its illicit character.

The banks (Financial Institutions) play an important role here, as they are part of international trade through provided services. They should therefore be aware of the risks and implement necessary instruments to detect financial flows connected to these crimes.10

To better understand the indicators of environmental crime it is important to know its supply chain. ECOFELS’s (The Egmont Centre of FIU Excellence and Leadership) report6 provide the following Actors Supply Chain for Wildlife Crime:

  • Poachers – capture the species

  • Runners/brokers - purchase product from the poacher

  • Intermediaries – provide logistics solutions

  • Exporters/Importers – move product between regions

  • Wholesalers – distribute purchased product in destination country

  • Retail traders – sale finished product

The risk of money laundering may occur in every connection between actors of the supply chain.6 With some modifications, the concept of this chain may be found in other environmental crimes.

There are some industries that are more vulnerable to environmental crime due to its character.

Naturally, the attention should focus on the industries which are directly connected to environmental crimes such as: timber and wildlife trade, mining and other natural resources extraction, gem and precious metal trade7 and also scraps and secondhand goods companies – which can be used for waste trafficking.10

However, there are other industries which could take part, consciously or unconsciously, in the illegal activity: financial intermediaries, law and accountancy companies, logistics and transportation companies.10

In line with the recommendation of the Basel Committee to include sustainability principles in the areas of credit risk measurement and management, many banks already include sustainability risks in their customer credit risk management procedures and carry out sustainability due diligence.10

In July 2021, the Financial Action Task Force issued FATF's first publication on Money Laundering from Environmental Crime

It contains best practices and case studies submitted by 40 counties, such as “recommending countries do not dismiss the threat or prevalence of environmental crimes based on their home country's reliance on, or availability of, natural resources, ensuring those with AML/CTF regulatory authority or responsibility have the tools and training to identify, report, and stop environmental crimes, and encouraging public-private partnership.”7

In the same report, FATF distinguishes several indicators of environmental crime, such as: 

  • front companies – used by criminals to mingle their legal and illegal activities using the same account for both types of operations, 
  • shell companies – used by criminals to imitate legal activities, 
  • trade-based fraud – falsification of trade documentation.3

FATF also recommended to assess business activities that may be related to various environmental crimes included in the enterprise-wide risk assessment, review risk factors related to business products or services, customer base and jurisdictions to strengthen internal controls and risk mitigation framework, and work with the public sector and civil society to share awareness and maintain an up-to-date understanding of the typology of crime and threats.7

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In October 2020 the DG Justice and Consumers published the evaluated Directive (Directive 2008/99/EC on the protection of the environment through criminal law)

The proposal: 

  • clarifies terms used in the definitions of environmental crime, 
  • updates the Directive to include new sectors of environmental crime, 
  • defines types and levels of sanctions for environmental crimes, 
  • supports cross-border investigations and prosecutions, improves decision-making on environmental crime cases,
  • improves the effectiveness of national law enforcement chains.11

Utilizing the AML framework offers a chance to more effectively prosecute perpetrators of crimes against wildlife, as AML laws often trigger higher penalties than environmental or wildlife crime.

The example below shows that analysis of transactional activity led to charges related to both environmental crime and money laundering.

"In 2016, the Australian Border Force (ABF) intercepted several outgoing international mail parcels containing native wildlife. Together with several intercepted inbound packages containing exotic wildlife they were linked to an Australian person of interest (POI).”(6) Financial intelligence took part in identifying the broader criminal networks. 

“Bank transaction information obtained from the FIU linked the primary POI directly to several Swedish wildlife traffickers, supporting the criminal investigation. Likewise, FIU analysis identified that the same Swedish entities had been sending funds to another Australian reptile trader.”6

The primary person of interest was convicted on six charges including: attempting to export regulated native specimens, importing of regulated live specimens, possession of illegally imported specimens and money laundering.

Additionally, the person was sentenced to 4 years in prison.

AML, including transaction monitoring, is still a developing area.

On the basis of recommendations and new regulations, as well as experience of financial intelligence units, the possibilities of alerting systems can be continuously improved.

Proper due diligence and transaction monitoring of our customers' transactions, gives us a chance to detect crimes against the environment more effectively.

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Marta Wójcik

Partner, Financial Crime Unit, PwC Poland


Anna Piwowarska

Director, Financial Crime Unit, PwC Poland


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