New study explores potential use of AML rules to reduce nature crimes
London, Wednesday 12 January 2022 – A new report published today from NatureFinance (formerly known as Finance for Biodiversity (F4B)) points to how to break the environmentally-destructive connection between environmental crimes and legitimate investments. F4B calls on the global financial community, working with regulators and civil society organisations, to take steps to ensure the entire financing value chain is free of environmental crimes.
Environment crime, such as illegal wildlife trade and logging, is now one of the most profitable global criminal enterprises, generating up to almost USD300 billion in criminal gains each year, and creating even more profound damage and cost to the environment and society. Many entirely legal enterprises benefit from such environmental crimes, as do those who finance them.
The report highlights the opportunity to reduce environmental crimes by widening the scope and interpretation of existing Anti-Money Laundering (AML) rules. Pointing to the limits of such an approach, however, the report highlights the need to go further, and proposes a way forward paralleling anti-slavery and conflict diamond approaches. Finally, it encourages the financial community to take leadership in advancing widely adopted and effective voluntary measures to ensuring environmental crime-free financing value chains, and points to first-mover advantages in avoiding likely reputation damage, litigation, and poorly-designed legislation.
The report is an invited contribution to the UK Government-sponsored Global Resource Initiative (GRI), a multi-sectoral taskforce mandated to provide recommendations on greening the UK’s international supply chain footprint. Its recommendations are, however, internationally applicable.
Simon Zadek, Chair, F4B said: “Our banks and pension funds benefit from environmental crimes as they unlock low-cost ecosystem services to the business in which they invest. Today’s anti-money laundering rules simply ignore this unintended route for turning the proceeds of crime into legal financial flows. Although such rules can and need to be strengthened, the faster way up the mountain is to establish new mechanisms for ensuring environmental crime-free value chains, building on comparable experience in addressing conflict diamonds and other unacceptable practices.”
Dr Rhian-Mari Thomas OBE, Chief Executive Officer, Green Finance Institute said: “There is increasing awareness of the devastating impact of illegal deforestation, illegal mining and extraction, illegal wildlife trading and waste trafficking on vital natural ecosystems, communities and economies, prompting calls from the UN, G7, G20 and other international bodies for accelerated action to combat financial flows from these environmental crimes. This short report from F4B sets out practical considerations for financial institutions, regulators and policy makers to seize the advantage of addressing the financial risks posed by these illegal practices and puts forward a compelling case that existing financial crime regulations, notably anti-money laundering rules, could and should be extended to break the connection between finance and environmental crime.”
David Craig, Co-Chair, Taskforce on Nature-related Financial Disclosures (TNFD) said: “Congratulations to Finance for Biodiversity Initiative on today’s report, calling out the growing rationale and imperative to ensure that money laundering laws and due diligence obligations should include environmental crimes such as illegal deforestation, pollution, wildlife trafficking and illegal fishing, to name a few.”
Margaret L. Kuhlow, Practice Leader, Finance, WWF International said: “Unless we end deforestation, land conversion, and nature loss, delivering on net zero goals and limiting global heating to 1.5°C will be impossible. Financial institutions have an instrumental role to play in driving positive change – by identifying companies most exposed to nature-related risks such as illegal deforestation, and channeling investment away from environmentally destructive activities toward nature-positive ones. F4B’s report offers practical ways for FIs to start this important process.”
Jade Saunders, Senior Policy Analyst, Forest Trends said: “Governments in the UK, EU and US are working to prohibit the trade in commodities grown on land which should not have been deforested. What is needed to exclude illegal commodities from legal supply chains is now clear. Industry norms are shifting, but the finance sector is lagging behind. This paper sets out a range of options for aligning investment with new regulatory standards that protect forests, as proposed by the GRI. Each option has the potential for meaningful impact on deforestation if everyone proactively plays their part – in the UK that would mean the Treasury and the Financial Conduct Authority stepping up, as well as financial institutions individually and collectively. We need to remember that time is running out and forest tipping points are passing – considering regulatory options should not be used as an excuse to delay action. Whatever legal approach is ultimately taken, financial institutions that say they care about forests need to do more, and urgently, to end their own contributions to deforestation.”
Richard Scobey, Executive Director, TRAFFIC said: “This valuable report outlines critical actions to help financial institutions address the continued occurrence of illegal wildlife trade and other environmental crimes in their financial value chains. Key steps include more rigorous application of existing AML rules, strengthening the environmental-related capacities of existing financial regulators, and encouraging the financial community to develop new due diligence frameworks and data sources. This analysis is essential reading for public and private sector leaders coming together in 2022 to finalize the 2030 Global Biodiversity Framework.”
Novo estudo explora o uso potencial de regras de prevenção e combate à lavagem de dinheiro para reduzir crimes contra a natureza
Londres, quarta-feira, 12 de janeiro de 2022 – Um novo relatório publicado hoje pela Finance for Biodiversity (F4B) aponta como quebrar a conexão perversa entre crimes ambientais e investimentos legítimos. A F4B demanda à comunidade financeira global tomar medidas para garantir que toda a cadeia de valor de financiamento esteja livre de crimes ambientais, trabalhando com reguladores e organizações da sociedade civil.
O crime ambiental, como o comércio ilegal de vida selvagem e a extração de madeira, é agora um dos negócios ilegais mais lucrativos no mundo, gerando até quase US$ 300 bilhões em ganhos criminosos anualmente causando danos e perdas para o meio ambiente e a sociedade. Muitas empresas que operam dentro da total legalidade se beneficiam desses crimes ambientais, assim como os seus investidores.
O relatório destaca a oportunidade de combater os crimes ambientais, ampliando o escopo e a interpretação das leis existentes contra a lavagem de dinheiro. O relatório destaca a necessidade de ampliar a ambição e propõe incorporar abordagens utilizadas nos casos contra escravidão e os diamantes de conflito. Por fim, incentiva a comunidade financeira a assumir a liderança no avanço de medidas voluntárias eficientes para garantir cadeias de valor de financiamento livres de crimes ambientais e evitar prováveis danos à reputação, litígios e legislação ineficaz.
O relatório foi elaborado para contribuir com a eliminação de crimes ambientais na cadeia de suprimentos internacional do Reino Unido. O estudo é uma contribuição para a forca tarefa do governo Inglês – a Global Resource Initiative (GRI). Entretanto, suas recomendações podem ser aplicadas internacionalmente.
About Finance for Biodiversity
Finance for Biodiversity (F4B) aims to increase the materiality of biodiversity in financial flows and decision-making, and so better align global finance with nature conservation and restoration. F4B is advancing five workstreams that create and amplify the feedback signals that increase the value of biodiversity in private and public financing decisions: market efficiency and innovation; biodiversity-related liability; citizen engagement and public campaigns; responses to the COVID-19 crisis; and nature markets. F4B has been established with support from the MAVA Foundation, which has a mission to conserve biodiversity for the benefit of people and nature.
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