Green Crime and Anti Money Laundering: The Threat and Consequences of Crimes Against the Environment

The threat of environmental malfeasance — “Green Crime” — has reached a global crisis stage, with an illegal industry of trade estimated to be worth nearly $250 billion per year. The global nature of the crimes, alarming pace of growth, severe environmental consequences, and the complexity of criminal network shave demanded recognition by the international financial crime community.

Green Crime is illegal activity that involves the environment, biodiversity, or natural resources. There are generally five types of major environmental crime: illegal logging, fishing, and mining, and crimes that harm wildlife and generate pollution.

The growth rate of Green Crime is alarming; according to estimates taken in 2016 by the United Nations Environment Programme, resources worth $91 billion to $258 billion annually were being stolen by criminals This would make Green Crime the world’s fourth-most lucrative criminal undertaking, after illegal drugs, human trafficking, and counterfeiting.

In addition, Green Crime is estimated to be growing by 5%-7% each year, which is 2–3 times the rate of the global economy.

Financial institutions should consider utilizing advanced data analytics and machine learning,where appropriate, to monitor transactional activity and systematically segment customers by behavior. By using behavioral analytics, an institution can segment customers into groups that behave similarly with respect to their transactions. Once customers have been segmented by transaction behavior, detecting unusual behavior can become easier. More importantly, suspicious activity alerts tend to include more genuine risk of potential illicit activity. For example, some authorities and wildlife groups have applied machine-learning techniques to search online social media platforms to identify black market listings. Financial institutions would benefit from using technology and data in a similar way, to detect the transactions and activity used to facilitate Green Crime.

This article discusses how financial institutions and regulators are targeting Green Crime through focused investigations and heightened Know Your Customer (KYC) reviews with the goal of uncovering exposure and pockets of elevated customer risk.