money Laundering And Illegal Wildlife Trade

Table of Contents

ACRONYMS 3 EXECUTIVE SUMMARY 5 INTRODUCTION 7 Chapter 1. ANALYSIS OF MONEY LAUNDERING FROM ILLEGAL WILDLIFE TRADE CASES 13 Scale and Characteristics of Financial Flows from the Illegal Wildlife Trade Methods to Launder Proceeds from the Illegal Wildlife Trade 13 17 Facilitation Role of New Technologies 23 Country Assessments of Money Laundering Risks 25 Chapter 2. FINANCIAL INVESTIGATIONS INTO THE ILLEGAL WILDLIFE TRADE OFFENCES 27 Legal Framework for Financial Investigations into Wildlife Crimes 27 Multi-Agency Co-ordination 30 Use of Financial Information to Identify Broader Wildlife Crime Networks 32 Parallel Financial Investigations 34 Asset Recovery 36 Additional Good Practices: Financial Investigations 38 Chapter 3. INTERNATIONAL CO-OPERATION 41 Legal Framework for International Co-operation Bilateral Co-operation and Joint Investigations 42 43 Multilateral Co-operation and the Role of International Organisations The Importance of High-level Commitment to Tackling IWT 45 47 Chapter 4. PUBLIC-PRIVATE COLLABORATION 49 The Role of Private Sector in Detecting Suspicious Activity Public-Private Partnerships Private-Private Information Sharing 49 53 55 Chapter 5. CONCLUSIONS AND PROPOSED ACTIONS Key Outcomes Proposed Actions to Strengthen the Global Response to ML from the Illegal Wildlife Trade 57 57 57 2 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE Annex A. INDICATORS OF LAUNDERING THE PROCEEDS OF THE ILLEGAL WILDLIFE TRADE 60 Annex B. OTHER GOOD EXAMPLES OF FINANCIAL INVESTIGATIONS INTO WILDLIFE CRIMES 63 REFERENCES 68 ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE | 3 ACRONYMS AML/CFT Anti-money laundering/Countering the financing of terrorism APG CDD ESAAMLG FI FIU FSRB HOSSP ILAT IUU IWT LEA Asia Pacific Group on Money Laundering Customer Due Diligence Eastern and Southern Africa Anti-Money Laundering Group Financial Institution Financial Intelligence Unit FATF-Style Regional Body Hawala and Other Similar Service Providers Illegal Logging and Associated Trade Illegal, Unreported and Unregulated Fishing Illegal Wildlife Trade Law Enforcement Authorities MLA Mutual Legal Assistance MVTS Money Value Transfer Service NPO Non-Profit Organisation PPP Public Private Partnership STR Suspicious Transaction Report TFS Targeted Financial Sanctions ©FATF/OECD 2020 4 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE | 5 1 2 3 4 EXECUTIVE SUMMARY 1. The illegal wildlife trade (IWT) is a major transnational organised crime, which generates billions of criminal proceeds each year. IWT fuels corruption, threatens biodiversity, and can have a significant negative impact on public health and the economy. To move, hide and launder their proceeds¹, wildlife traffickers exploit weaknesses in the financial and non-financial sectors, enabling further wildlife crimes and damaging financial integrity. Despite this, jurisdictions² rarely investigate the financial trail left by this crime. 2. The FATF is concerned about The Financial Action Task Force (FATF), as the global standard setter on anti- money laundering (AML), countering the financing of terrorism (CFT) and countering proliferation financing (CPF), is concerned about the lack of focus on the financial aspects of this crime, and has conducted this study to support jurisdictions to combat related money laundering. The FATF Standards (i.e. 40 Recommendations³) provide a useful framework for jurisdictions to address these threats by strengthening their national laws, policies, and co-operation at the domestic and international level. 3. the lack of financial focus on the illegal wildlife trade. This is the FATF's first global report on IWT. It builds on previous studies by two of the FATF-Style Regional Bodies (FSRBs), work by other international bodies and recent initiatives by the private sector. This study by the FATF makes a unique contribution by assessing the money laundering (ML) aspects of wildlife crimes, and by demonstrating how jurisdictions should apply the FATF standards to combat IWT. The findings in this report are based on inputs from around 50 jurisdictions across the FATF Global Network4, as well as expertise from the private sector and civil society. 4. This study highlights that jurisdictions should view the proceeds generated by IWT as a global threat, rather than as a problem only for those jurisdictions where wildlife is illegally harvested, transited, or sold. In particular, criminals are frequently misusing the legitimate wildlife trade, as well as other import-export type businesses, as a front to move and hide illegal proceeds from wildlife crimes. They also rely regularly on corruption, complex fraud and tax evasion. Another key theme of this study is the growing role of online marketplaces and mobile and social media-based payments to facilitate movement of proceeds from wildlife crimes. These trends highlight the increasing importance of a coordinated response from public authorities, the private sector and civil society to identify and disrupt financial flows from IWT. 5. As in prior studies, the FATF has found that despite IWT's global impact, public and private sectors in many jurisdictions have to date not prioritised combatting the financial flows connected to IWT in line with risk. Jurisdictions often do not have the knowledge, legislative basis, and resources required to assess and combat the threat Proceeds refers to any property derived from or obtained, directly or indirectly, through the commission of an offence. As in the FATF Recommendations, the terms country and jurisdiction are used interchangeably throughout this report. The FATF Recommendations are the internationally endorsed global standards against money laundering and terrorist financing: they increase transparency and enable countries to successfully take action against illicit use of their financial system. The FATF assesses countries against the 40 FATF recommendations as part of the FATF mutual evaluation process. The FATF Global Network is comprised of 205 jurisdictions around the world that have committed to implementing the FATF standards. ©FATF/OECD 2020 6 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE posed by these funds. This limited focus on the financial side of IWT has largely prevented jurisdictions from being able to identify and sanction IWT networks. 6. To address these challenges, jurisdictions should consider implementing the following good practices that were observed during the study: 7. • • • • Prioritise combatting the financial flows associated with IWT proportionate to risk. Provide all relevant agencies with the necessary mandate and tools to conduct successful financial investigations into IWT. Improve co-ordination between authorities It is essential that jurisdictions maintain their focus on illegal wildlife trade financial flows. responsible for combatting wildlife crimes and those responsible for conducting financial investigations to ensure authorities more regularly exchange information and follow the financial trail. Cooperate with other jurisdictions, relevant international organisations and the private sector to combat IWT. A comprehensive list of proposed actions to strengthen measures to tackle the financial flows associated with IWT is included on pages 58 to 60 of this report. 8. This study greatly improves the FATF Global Network's understanding of the financial flows from IWT, including through presenting IWT risk indicators on pages 60 to 62 relevant for public authorities and the private sector. However, there is still work to be done. This report shows the need to further improve the FATF Global Network's collective understanding of the risk relating to IWT, including work on the role of non-financial entities in combatting IWT financial flows, greater understanding of the differing geographic supply chains, and good practices to address unique challenges in managing assets recovered during wildlife crime investigations. 9. It is essential that jurisdictions maintain their focus on IWT financial flows to achieve meaningful progress in addressing the challenges identified in this study. ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE 7 INTRODUCTION The Issue 10. The illegal wildlife trade (IWT) is a major transnational organised crime that fuels corruption, threats biodiversity, and can have significant public health impacts. In particular, the spread in recent years of zoonotic diseases5 underlines the importance of ensuring that wildlife is traded in a legal, safe and sustainable manner, and that countries remove the profitability of illegal markets. According to the 2016 UN World Wildlife Crime report, criminals are illegally trading products derived from over 7 000 species of wild animals and plants across the world6. This includes iconic mammals, but also lesser-known species of reptiles, birds and amphibians. 11. To reflect the serious nature of this crime, the UN General Assembly has adopted several resolutions to combat IWT, and in September 2019, reiterated its call for all members “to amend national legislation, as necessary and appropriate, so that offences connected to IWT are treated as predicate offences for money laundering (ML) (UN General Assembly Resolution 73/343)7. " 12. Criminal syndicates involved in wildlife crime continue to be highly organised, and are often involved in other forms of serious crime. For example, the large-scale ivory seizures and mixed shipments of multiple protected species suggests that transnational syndicates are continuing to grow and diversify. Wildlife traffickers also continue to rely heavily on the bribery of officials (e.g. including rangers, customs agents, prosecutors, and judges), as well as complex fraud and tax evasion, to enable their crime. Several investigations provided for this study showed convergence between IWT and transnational drug trafficking networks and/or illegal logging and associated trade (ILAT). However, the convergence of IWT with other types of transnational organised crime appears to take place only occasionally. 13. Despite billions of dollars generated from IWT, most efforts taken by countries to date have rarely focused on the financial aspect of this crime. While competent authorities around the globe regularly seize illegal wildlife and products, countries are still rarely conducting financial investigations in parallel as a tool to identify and bring to justice those involved. This is in part due to the particular challenges that IWT presents. For example, the fact that criminals take advantage of the substantial legitimate wildlife trade to co-mingle licit and illicit proceeds presents challenges for detecting illicit activity. Laundering of proceeds from wildlife crime generally involves activity to either conceal or disguise the source, movement and ownership of those funds. Due to the low number of financial investigations to date, both the private and public sector have a less developed knowledge of the trends, methods and techniques used to launder proceeds from IWT than for other major transnational crimes. This further inhibits an effective response. 5 6 7 8 9 Zoonotic diseases are derived from viruses, bacteria, and other pathogens that are transmitted between animals and humans. According to the World Health Organisation, some 60% of emerging infectious diseases that are reported globally are zoonotic (including COV-ID 19, Ebola, MERs, and SARs). UNODC (2016), World Wildlife Crime Report UN General Assembly Resolution 73/343, full text available at: https://undocs.org/en/A/RES/73/343 For the purpose of this report, syndicates refers to organised criminal groups. While some may be highly centralised, others may involve actors loosely cooperating, non-hierarchical and flexible groups; some co-operation may be short-lived in nature and happen on a per-shipment basis. In the case seen for this report, some dynamics may be heavily influenced by familial and/or kinship connections. Even in jurisdictions with a wide range of biodiversity. ©FATF/OECD 2020 8| MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE 10 11 12 14. There are a number of reasons why following the financial flows, identifying ML, and recovering the proceeds and instrumentalities of this crime are important. Firstly, following the money allows countries to identify the wider network of syndicate leaders and financiers involved and to reduce the profitability of this crime (and thus reduce the supply of poached or trafficked wildlife) over the longer term. Secondly, in many countries, penalties for ML offences are more severe than for wildlife crimes; therefore, by pursuing ML and confiscation charges alongside wildlife offences, countries can help shift the perception of IWT as a low-risk/high-reward crime. Thirdly, as mentioned above, syndicates involved in wildlife crime are often involved in broader criminality; therefore, by identifying and dismantling the networks that engage in IWT, countries can help prevent and tackle associated crimes, such as corruption and complex fraud. Finally, combatting criminal organisations through their financial flows is a significant legal and investigative tool to prevent wildlife trafficking and the potential proliferation of zoonotic diseases. Objectives of this Report 15. This report is intended to: 16. • • Following the money allows countries to identify the wider network of syndicate leaders and financiers involved, and to reduce the profitability of this crime. Increase understanding of ML risks from IWT among competent authorities10 and the private sector and highlight the importance of robust legal frameworks to investigate and confiscate proceeds of this crime. Provide guidance to law enforcement authorities (LEAs) and other agencies on good practices for carrying out financial investigations into IWT¹¹1, including for the purpose of asset recovery, and the important role of international co-operation. • Increase awareness of the role that relevant financial institutions and non- financial businesses can play in detecting suspicious activity related to wildlife crimes, including specific risk indicators and types of public-private and private-private collaboration. • • • • Provide concrete actions that jurisdictions across the FATF Global Network12 can take to help identify and combat ML linked to IWT. This report addresses these objectives in the following chapters: Chapter One: provides an overview of IWT supply chains, common techniques used to launder proceeds from the illegal trade, and considerations for national authorities when assessing related ML risks. Chapter Two: presents good practices and case studies for financial investigations and asset recovery into IWT offences. Chapter Three: discusses good practices regarding international co- operation to combat ML linked to the IWT and recover related proceeds. In the context of this report, competent authorities refers to all public authorities responsibilities for combating money laundering and/or terrorist financing and/or wildlife crimes. Importantly, this may include authorities with the core responsibility to conduct financial investigations into a wide range of crimes, but also authorities mandated to respond and investigate wildlife crimes and related seizures. The FATF Global Network is comprised of 205 jurisdictions around the world that have committed to implementing the FATF standards. ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE | 9 13 14 15 16 17 18 19 20 17. • Chapter Four: discusses the role of the private sector in detecting suspicious activity and presents good practices for public-private collaboration, including the dissemination of IWT-related risk indicators. The report concludes by proposing actions for countries to advance the fight against IWT and related ML, as well as identifying areas for further study. Relevant Work by the FATF Global Network and other Bodies 18. This is the FATF's first global report on IWT. This report builds upon two regional studies carried out by FATF-style regional bodies (FSRBs). In 2016, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) conducted a typologies study¹³, which found that countries had limited information on the financial flows from IWT, and that authorities needed more information on the ML methods and techniques used in destination countries for illegal wildlife. Similarly, in 2017, the Asia Pacific Group on ML (APG) and the UN Office on Drugs and Crime (UNODC) conducted a study on financial investigations in the region¹4. It identified similar findings to the ESAAMLG work i.e. few countries were carrying out financial investigations into IWT (only 26% of the respondents), and that countries rarely used multi-agency co-ordination, asset recovery or special investigative techniques in IWT cases. 19. There is a wealth of research by other bodies on IWT more generally, including by the International Consortium on Combating Wildlife Crime (ICCWC)15, the UN Environment Programme (UNEP), OECD16, and non-governmental organisations (NPOs)¹7. While the majority of this work to date has focused on the methods used to conceal and traffic the illegal wildlife, there have been a growing number of studies focused on the financial side of this crime. In 2019, Legal Atlas conducted an in-depth review of AML laws of 110 jurisdictions to assess their adequacy in enabling their application to IWT and found that 45 of the 110 were not satisfactory18. In addition, the OECD's Task Force on Countering Illicit Trade (TF-CIT) has published reports on the necessary governance, co-ordination and capacities to tackle IWT, including through financial investigations.19 The Egmont Centre of FIU Excellence and Leadership (ECOFEL) is also conducting ongoing work to provide guidance to Financial Intelligence Units (FIUs) on financial investigations in wildlife and forestry crimes.20 20. This FATF study adds value to existing literature by focusing specifically on the ML aspect of this crime, and by drawing on the good practices that have emerged at the global and regional levels since the APG/UNODC and ESAAMLG reports. ESAAMLG (2016) Special Typologies Project Report on Poaching and Illegal Trade in Wildlife and Wildlife Products APG/UNODC(2018), Enhancing the Detection, Investigation and Disruption of Financial Flows from Wildlife Crime ICCWC is an initiative by five inter-governmental organisations to combat IWT. The partners are CITES, INTERPOL, UNODC, WCO and the World Bank, and an overview of their work can be found at the following link: https://cites.org/sites/default/files/eng/prog/iccwc/ICCWC menu of services-revApril18.pdf The OECD Task-Force for Countering Illicit Trade (TFCIT) has released a number of studies on IWT, including a Report on IWT and Corruption in South and East Africa (Strengthening Governance and Reducing Corruption Risks to Tackle IWT (2018)); and a report on Governance Frameworks to Counter Illicit Trade (2018). Royal United Services Institute, Follow the Money: Using Financial Investigation to Combat Wildlife Crime (2017). Legal Atlas is an organisation that was commissioned to conduct IWT legal research by the UK government following the adoption of the 2017 UNGA Resolution. The Illegal Wildlife Trade in Southeast Asia - Institutional Capacities in Indonesia, Singapore, Thailand and Viet Nam (2019). Accessible at: www.oecd-ilibrary.org/governance/the-illegal-wildlife-trade-in-southeast-asia e89fdac0-en;jsessionid=3quZdQb9skgXxF8bfpATxNmc.ip-10-240-5-37 This work is due to be finalised in mid-2021, and will include operational training for FIUs on their role in support investigations into wildlife crimes. ©FATF/OECD 2020 10 | MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE Scope and Terminology 21. There is no internationally agreed definition of IWT. The "wildlife trade" can be domestic or international, and legal or illegal. For the purposes of this report, IWT refers to any of the below mentioned activities conducted in contravention of national or international laws and regulations (including the CITES Appendices). "Domestic trade" includes any commercial or non-commercial activity, including, but not limited to offering, offering for sale, distribution, brokerage or other forms of intermediary activity, sale, delivery, dispatch, consignment, transport, purchase, possession, donation, exchange, exhibition or employment of any specimen of a wild protected species (or part thereof), within territory under the jurisdiction of a given country. "International trade” means any export, re-export, or import and introduction from the sea of any specimen of a wild protected species (or part thereof). Box 1. Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) – Appendices I, II, and III CITES entered into force in 1975, and establishes the legal framework and procedures for the regulation of international trade in over 37 000 species of animals and plants. Its aim is to ensure that international trade in these species does not threaten their survival. All import, export, re-export and introduction from the sea of CITES-listed species is regulated by CITES and must be authorized through a licensing system. To date, 182 states and the European Union have ratified or acceded the Convention, including all FATF members. The species covered by CITES are listed in three Appendices according to their degree of protection. Changes to the appendices are made periodically by CITES State parties. International trade is prohibited for all species listed on CITES Appendix I (e.g. all 8 species of pangolins) with very limited exceptions when the purpose of the import is not commercial e.g. for scientific research, educational or law enforcement purposes. Appendix II includes species not necessarily threatened with extinction (e.g. fruit bats), but for which trade must be controlled in order to avoid endangering their survival. Appendix III contains species protected in at least one country, that has asked other CITES Parties for assistance in controlling the trade. A specimen of a CITES-listed species may be imported or exported (or re- exported) from a State Party to the Convention only if the appropriate document has been obtained from the competent authority² (CITES Management Authority) and presented for clearance at the port of entry or exit. CITES is implemented at national level by its State Parties and in accordance with their national legislation and regulations. Any trade within their jurisdiction that contravenes such legislation will be considered illegal and should be penalised. There is variation in legislation from one country to another. Some countries, for example, implement stricter domestic measures as described in Article XIV2 of the Convention. Therefore, it is always necessary to refer to the national laws of the countries concerned. 1. National CITES Authorities, www.cites.org/eng/cms/index.php/component/cp (accessed 6 April 2020). 2. Convention on International Trade in Endangered Species of Wild Fauna and Flora, www.cites.org/eng/disc/text.php#xiv (accessed 6 April 2020) Source: CITES Secretariat. ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE 11 22. This report does not cover illegal logging and associated trade (ILAT) or illegal, unreported and unregulated fishing (IUU). While the financial flows from these offences are significant, the project team decided that due to the distinct actors and markets for ILAT and IUU, it would not be feasible to cover these issues within this report. Nevertheless, this report does cover the illegal trade of marine wildlife outside of fishing, which represents a significant illicit industry (such as abalone, eels, elders, turtles, sea cucumber, shark fin and narwhals). This report does not address the links between IWT and terrorist financing, as current evidence suggests that this is not yet a widespread typology. Box 2. What is the Difference between the Illegal Wildlife Trade and the Legal Trade in Wildlife? There are at least seven billion people consuming products of biodiversity every day, in the form of food, cosmetics, pharmaceuticals, pets, etc. Millions of people depend on plants and animals for their livelihoods and survival, indigenous communities in particular. When trade in wildlife is legal, safe, and traceable, it can be a strong incentive for managing wildlife sustainably as well as a driver in improving people's livelihoods, contributing towards achieving the UN Sustainable Development Goals.1 Of the more than 37 000 species of animals and plants listed under CITES, 97% can be legally traded for commercial purposes. CITES supports a multibillion US dollar wildlife trade. For example, the trade in Queen conch, an edible mollusk, is estimated at USD 60 million per year; pythons, often used for leather, are a USD 1 billion per year industry; and bigleaf mahogany is a USD 33 million per year business. CITES is implemented through the issuance and exchange of permits and certificates between exporting and importing countries. This is the backbone of the Convention and CITES Parties currently issue over one million permits per year worldwide. These permits document the legality and sustainability of the transaction. Illegal trade in wildlife, on the other hand, poses a threat to the survival of some of the world's most charismatic species and many lesser-known species, often with devastating economic, social, and environmental consequences. Furthermore, the risk of zoonotic diseases in illegally traded wildlife, which have evaded veterinary checks and inspections related to sanitary safety standards and regulations, transmitting to humans is likely to be greater than for legal trade where such checks are routine. In terms of illegal wildlife trade, there are two key types: 1. 2. • • Trade in species that are protected and prohibited from all national or international commercial trade (may be clandestine or overt through fraudulent activities, e.g., wild-caught animals falsely declared as captive-bred, wildlife falsely declared as being pre-Convention²). Trade in volumes of specific species of wild origin which is unsustainable and in violation of CITES provisions or national provisions, often with limited regulatory controls. The 2015 UN Sustainability Goals set out a blueprint for countries to achieve a better and more sustainable future for all by 2030, www.un.org/sustainabledevelopment/sustainable-development-goals/. A pre-convention specimen is a specimen acquired before the provisions of the Convention applied to it. Source: CITES Secretariat. ©FATF/OECD 2020 12 | MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE Methodology 23. The President of the FATF made tackling financial flows from IWT a priority area for the Chinese Presidency of the FATF (2019-2020)21. Delegations from Botswana, China and the United Kingdom have co-led this work. The project team for this work included delegations from 18 countries22, alongside representatives from CITES Secretariat, Egmont Group of FIUS, EUROPOL, IMF, INTERPOL, UNODC, and World Bank. Given the important role that non-government stakeholders play in the fight against IWT, representatives from the United for Wildlife (UfW) Financial Taskforce23 and five non-profit organisations (NPOs)24 also actively participated in this project. 24. The methodology that the project team used to conduct research and develop this paper involved: • • • • A review of existing literature on this topic and open source material, to identify key challenges in combatting the financial side of IWT, and the evolving threat landscape. A request to FATF and FSRB members to provide information on their domestic response to combat the financing of IWT, and laundering of its proceeds. This included circulation of a questionnaire to countries on their wildlife crime risk profile, common financial and ML trends, legal and institutional frameworks, good practices for conducting financial investigations for IWT, and information on public-private collaboration and international co-operation. In total, the project team received inputs from 49 jurisdictions and entities25, including questionnaire responses from 45 jurisdictions, alongside over 50 cases. Close co-operation with relevant financial and non-financial institutions and NPOs to develop a set of risk indicators of financial flows linked to IWT, and examples that demonstrate how these non-government stakeholders can support financial investigations into IWT. In total, inputs were received from 15 financial institutions and 5 NPOs. A workshop chaired by the co-leads on the margins of the FATF plenary meeting in February 2020 to gather information for this project from both public and non-government stakeholders. 21 FATF (2019), Chinese Presidency Priorities for the Financial Action Task Force 22 23 24 25 Australia, Botswana (ESAAMLG), Brazil, China, Canada, European Commission, France, Germany, Japan, Ireland, Italy, Malaysia, Mexico, Netherlands, Singapore, Spain, United Kingdom, United States. The Taskforce includes financial institutions that have committed to using their anti-financial crime programmes to detect IWT. Representatives from TRAFFIC, Wildlife Justice Commission (WJC), Liberty Shared, Environmental Investigation Agency (EIA), Wildlife Conservation Society (WCS), and Legal Atlas provided inputs for this work. FATF (Argentina, Australia, Brazil, Canada, China, Denmark, EUROPOL (observer), France, Germany, Greece, Hong Kong (China), Ireland, India, Indonesia (observer), Japan, Malaysia, Netherlands, Norway, Portugal, Singapore, South Africa, Sweden, Switzerland, UK, US); APG (Cambodia, Loa PDR, Macao China, Thailand); ESAAMLG (Botswana, Malawi, Tanzania, Zambia); GABAC (Central African Republic, Chad, Congo-Brazzaville, Gabon); GAFILAT (Chile, Costa Rica, Guatemala); GIABA (Burkina Faso); MENAFATF (Algeria, Yemen); MONEYVAL (Czech Republic, Hungary, Isle of Man, North Macedonia, Malta, Slovenia). ©FATF/OECD 2020 MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE | 13 Chapter 1. ANALYSIS OF MONEY LAUNDERING FROM ILLEGAL WILDLIFE TRADE CASES Scale and Characteristics of Financial Flows from the Illegal Wildlife Trade Challenges to Estimate the Global Scale of Illegal Wildlife Trade 25. There are several challenges in accurately estimating proceeds from the illegal wildlife trade (IWT). The figures from wildlife seizures represent only a segment of proceeds generated, and jurisdictions have only recently been subject to a common reporting standard (i.e. weight, number of pieces, number of seized items, etc.)26. Moreover, efforts to detect and quantify proceeds face challenges due to a lack of available and accurate data on wildlife trade numbers, and the fact that criminals often co- mingle IWT with large flows of legal trade. One method that countries have used to try to quantify IWT proceeds is to compare the volume of reported legal wildlife trade with the volume of imports; however, a detailed quantitative analysis of this nature is outside the scope of this study. Globally, IWT proceeds have been estimated at between Illegal wildlife trade covered by the scope of this report is a major transnational crime generating billions of USD in profits every year USD 7 and 23 billion per year, 27 or alternatively, at around one quarter of the amount generated from the legal wildlife trade28. While the exact range is very challenging to quantify, this study supports the finding that IWT covered by the scope of this report is a major transnational crime generating billions of USD in profits every year. Of the cases provided for this report, just under half involved proceeds of several million USD. As with other forms of illicit trade, there is often a significant price mark-up between the source and destination countries (see box 3 below). Box 3. Examples of Mark-up and Potential Proceeds for the Illegal Wildlife Trade The following examples give an indication of the magnitude of the proceeds generated in the IWT market, based on quoted prices. The examples only provide a snapshot in time1. • • Juvenile Glass Eels2: In Europe, juvenile glass eels are worth USD 300 to 500 per kg. However the price can reach as high as USD 1 500 to 6 000 per kilo when exported to destination countries. This represents a mark-up of 200% to 1 100%. Ο According to EUROPOL data, between 2018 and 2019, European law enforcement seized 5 789 kg of smuggled juvenile glass eels with an estimated value of USD 2 153 per kilo³, which equated to potential proceeds of around USD 12.5 million⁴. Ivory: While the price paid to elephant poachers can be just USD 200 or less, in destination markets ivory can be priced at between USD 500 and 26 Since 2017, a common reporting standard is available through CITES Annual Illegal Trade Report: https://www.cites.org/sites/default/files/notif/E-Notif-2019-072-A2.pdf 27 UNEP-Interpol (2014 UNEP); World Bank, Illegal Logging, Fishing, and Wildlife Trade: the Costs and How to Combat it (2019). 28 Van Uhm (2016) The Illegal Wildlife Trade Inside the World of Poachers, Smugglers and Traders. ©FATF/OECD 2020 14 | MONEY LAUNDERING AND THE ILLEGAL WILDLIFE TRADE 1. 2. 3