Source: Public Domain (Wikimmedia Commons)
Green crime has climbed the agenda of financial institutions, law enforcement, regulators and the technology sector following the COVID-19 pandemic and the increased presence of the climate crisis. The pandemic in particular shone a blinding light on the global wildlife trade and the impact its lack of regulation can have. Companies are increasingly focusing on markers of environmental related crime, however the pace remains slow and poses a threat to increased levels of sustainability fraud.
Green Crime: What Is It?
Although possessing no agreed-upon definition, green crime encompasses a wide range of offences including the flouting of environmental regulations; wildlife crime; and damaging of air, soil or water via pollution, dumping or illegal logging. The actors involved range just as widely as the acts they commit, from large organised crime groups to multinational companies.
The UN defines green crime as “illegal activities harming the environment and aimed at benefiting individuals or groups or companies from the exploitation of, damage to, trade or theft of natural resources, including serious crimes and transnational organized crime.” In other words, environmental crime covers any activities that cause significant harm or risk to the environment and human health.
Environmental crimes are estimated to be worth as much as USD 258 billion annually. Such crimes are predominantly borderless and make use of the very same routes and infrastructure as other criminalities such as corruption, fraud and even murder. One key difference between green crime and other serious forms is that the natural resources involved in green crime are finite. They cannot be reproduced like money or synthetic drugs in a lab or a mint. Thus, the sense of urgency to address such criminality should be prominent.
What are the Impacts?
The negative impacts of green crime are numerous and wide ranging. Not only does green crime directly harm the environment, but it also impacts supply chains, allows organised crime groups as well as militias to fund their violent activities, reduces biodiversity, elevates pollution levels, reduces human life expectancy, and poses a danger to global peace and security.
Research undertaken since the onset of the COVID-19 pandemic has begun to draw conclusions around potential links between green crime, climate change and an increased risk of future pandemics.
A Global Problem
Green crime has become a truly global industry. It does not only affect countries with weaker governments, rich resources or large mining or forestry industries. Indeed, countries with economies that are not natural resource driven are also vulnerable, albeit for different reasons. Countries that have large financial or service hubs, such as the United Kingdom, Singapore and Hong Kong, can play a role in facilitating environmental crime, for example via the creation of complex corporate structures or shell companies to launder the proceeds of such crime.
In addition, many wealthy western countries are used as transit or destination countries for illegally trafficked timber, animals or waste. Countries with some of the largest economies and central positions in the global market are also where illegally mined metals are transported. Although a global financial centre may appear only tenuously linked to a rainforest, the flow of illicit funds made as a result know no borders – nor does the impact felt by humans and the environment.
Is the International Community taking Notice?
There are early indications that international organisations are slowly waking up to the phenomenon. The EU, in its most recent anti-money laundering directive, has included environmental crime as a predicate money laundering offence for the first time. Furthermore, in June 2021, an MEP called for the creation of an EU Green Prosecutor. Both Europol and Interpol have publicly acknowledged links between green crime and various forms of transnational organised crime. In addition, the European Central Bank now takes into account climate risks during risk assessments.
Despite this gradually growing recognition of the issue, the magnitude and quantity of fines and sanctions, and the quality of the law enforcement effort directed towards this type of illegal activity is far less than that directed towards money laundering and terrorist financing. This is the case despite green crime taking the position of the world’s fifth most lucrative criminal enterprise and despite it’s growth being between 5 and 7 percent each year – double the rate of global GDP growth.
Green crime can be as financially lucrative as drug, human or firearms trafficking, yet it is much harder to detect, making it lower risk and very attractive. Thus, it appears that various sectors would be wise to direct more consideration towards the damage caused by green crime. National governments, the majority of whom do not consider or incorporate environmental crime into their national money laundering risk assessments, would be wise to begin doing so. Without this, regulators and businesses operating in a country are unlikely to be as aware of the risks some of their clients pose.
What are the Challenges?
Green crime is becoming more complex, organised and transnational by the year. Furthermore, green crime cannot be measured in the same aggregate quantitative way that street crimes can. Quantitative data on environmental criminality must be collected across different levels of analysis and location.
Even once the challenges around gathering quantitative data have been overcome, such data alone will be insufficient. Qualitative data is becoming increasingly important too. Some impacts on the earth felt as a result of environmental crime cannot be counted, but must instead be described in a way that transforms the harms into something concrete and evident. The diversity of methods used to measure and record green crimes is required to be just as diverse as the crimes themselves have proven to be. Without this, policy makers and other relevant stakeholders will not be influenced enough to take the difficult steps required to tackle the issue.
What Needs to Happen Now?
Although current efforts in this area are not yet sufficient and the picture appears bleak, there are countless multilevel and multisector technical and policy actions that can be taken. Greater information sharing between stakeholders (which include governments, financial institutions, the private sector and law enforcement) will be key to fighting green crime more effectively. Stakeholders must also embrace technology and data analytics to make progress in combatting green criminality.
Collaboration between the public and private sector is also very much needed so that corporations, regulators, politicians and the financial sector can work together to find solutions. Such collaboration could take various forms, one of the most potentially impactful being via better information sharing. Establishing multisector dialogues on the topic is another important manifestation of such collaboration.
Environmental legislation should be strengthened in a number of countries where it remains weak, as well as increasing the funding and resources available to law enforcement. A general increase in awareness of the green crime phenomenon is also needed. Fortunately, the public mood is currently ripe for greater consideration of this topic.
Financial institutions have a vital part to play. They must enhance their due diligence procedures to take into greater account relevant red flags when dealing with clients in a wider range of areas, such as logistics, natural resources, and high-value luxury goods. Indeed, one survey revealed that 40 percent of third party relationships within the global supply chain escape any form of preliminary due diligence checks, this number rising to 60 percent when considering ongoing monitoring. Banks can also assist law enforcement by providing important financial intelligence.
A “follow the money” approach is particularly needed in all countries, not just those that are more vulnerable to corruption and fraud. Tracing the proceeds will not only help ascertain the source, but also will reveal important information about the motivators, facilitators, and indeed the culprits, for green crime. Those anti-money laundering professionals with the capacity to track illicit funds must be allowed to build relationships with less traditional partners, such as environmental crime investigators and protection agencies.
In addition, it is vital that key stakeholders appreciate the linkages between green crime and climate change, as each exacerbates the other. If action is not taken, criminals and corporations will continue to exploit the post-COVID green transition as a business opportunity and in the process rob our planet of a sustainable future.
