Global wildlife populations face grave threats from many factors, including climate change, deforestation and pollution, while consumer demand for wildlife and wildlife products accelerates the speed with which many species move toward extinction. One additional threat that is sometimes overlooked is the proceeds generated from the illegal wildlife trade (IWT), which frequently involves criminal groups that operate with impunity. Moreover, since 2002, there have been at least four instances in which zoonotic diseases, including COVID-19, may be linked to the wildlife trade.1 Consequently, wildlife trafficking can threaten biodiversity, fuel corruption and increase risks for the spread of zoonotic diseases with pandemic potential.2
The U.S. is not immune to IWT and is a source and destination for wildlife trafficking and the financing of this crime. For example, in the U.S., it is estimated that there are more captive tigers than the total number of tigers remaining in the wild globally.3 Because most tigers in the U.S. are privately owned, it can be difficult to pinpoint which ones arrived by or are destined for the illicit supply chain.
Why It Matters to AML Professionals
It is estimated that wildlife trafficking generates billions of dollars per year in criminal proceeds.4 In business terms, wildlife trafficking offers criminal groups a profitable way to diversify their portfolios, become niche service providers or opportunistically target high-yield investments. While the overall aggregate figure of criminal proceeds from IWT is small in comparison to criminal proceeds laundered in and through the U.S. from fraud, drug trafficking, human trafficking and public corruption,5 IWT is still of concern to the U.S. government.
It is estimated that wildlife trafficking generates billions of dollars per year in criminal proceeds
Many steps have been taken to prevent IWT, including the multilateral Convention on International Trade in Endangered Species (CITES) agreement that entered into force in 1975, which establishes the legal framework and procedures for international trade regulation in over 38,000 species of animals and plants.6 However, relevant laws and regulations—where they exist—are not implemented consistently and effectively, creating a vulnerability that illicit actors can easily exploit.7 Also, because corruption intersects with wildlife trafficking in every stage of the supply chain, it undermines countries’ efforts to tackle illicit trade.8 Finally, unlike with other serious crimes, many governments do not prioritize tracing the financial footprint of wildlife trafficking or systematic outreach to provide relevant typologies and risk indicators to financial institutions (FIs) and designated nonfinancial businesses and professions (DNFBPs). Thus, these harmful crimes occur in a blind spot for much of the private sector, especially for businesses that facilitate financial transactions involving certain customer types, sectors and geographic locations.
While wildlife trafficking has been an illicit finance threat for decades, in recent years, the public, private and nonprofit sectors have focused efforts to raise awareness and commit to addressing the links with money laundering.9 As governments turn those commitments into actions, U.S.-based AML professionals can ensure they are prepared by understanding a) how wildlife traffickers misuse the financial system; b) how the U.S. government is combating the illicit finance of IWT domestically; and c) how to potentially mitigate the risks related to IWT.
How Wildlife Traffickers Misuse the Financial System
IWT typologies can resemble the trafficking of other goods, such as drugs or timber. As documented in the Financial Action Task Force’s (FATF) wildlife trafficking report, laundering of proceeds occurs along various stages of the IWT supply chain in source, transit and destination countries.10 In addition, money can be laundered to third countries not involved in the commodity supply chain to disguise its origins. Often, criminal groups use front and shell companies to conceal payments and launder the proceeds of illicit activities, including in financial centers with weak AML regulatory and supervisory regimes. Because the leadership of criminal groups is frequently in destination or surrounding countries, “following the money” can effectively identify links between the broader network and individuals.
In destination countries, smuggled wildlife and wildlife products can be sold across a diverse range of settings, including antique shops, exotic food markets, jewelry merchants, pet stores, restaurants, retail outlets, souvenir shops and traditional medicine suppliers, in addition to online platforms and e-commerce. For each category, there are numerous transit routes, trader profiles and consumer identities based on cultural, economic and societal drivers of the illegal trade. Thus, IWT risk indicators and typologies must account for a multifaceted crime that cannot be addressed with a one-size-fits-all approach. The FATF report provides greater detail, including case studies and risk indicators, which FIs can review to understand their risk exposure better.11
For example, U.S. authorities monitor the activities of both licensed and unlicensed pet businesses and private zoos for the illegal trade of tigers. The sale of tigers, which can range from $2,000 for adult tigers to $30,000 for white tiger cubs, can be “facilitated by creating false receipts for other expenses and money deposited through local money or value transfer services (e.g., via associates, colleagues at the zoo)….”12
While this type of initial analysis will need to be further developed, it provides AML professionals with an illustrative example of suspicious activity in the U.S. and some peculiarities warranting special attention. An institution could monitor for significant transactions involving pet supply vendors and zoos that do not appear to be consistent with the nature and profile of the customer. Also, watch for third-party transfers that may be misaligned with the legitimate operations of pet businesses and related sectors. Finally, consider whether zoos involved in transactions are accredited by the Association of Zoos & Aquariums (AZA). Because AZA-accredited zoos are monitored and subject to the organization’s standards, the extra layer of scrutiny may make it harder for bad actors to abuse these institutions.
How the U.S. Government Is Combating the Illicit Finance of IWT Domestically
While the U.S. is at the international forefront of using law enforcement authorities to disrupt the financing of wildlife trafficking, the crime persists. As U.S. Fish and Wildlife Service (USFWS) acknowledged in its fiscal year 2020 budget, the U.S. “remains one of the world’s largest markets for legal and illegal wildlife and wildlife products.”13
Between 2019 and 2021, numerous defendants were charged and convicted in dozens of wildlife trafficking cases in U.S. courts. Several recent U.S. cases focus on protected turtles being shipped to and from East Asia, where North American turtles are prized as exotic pets, meat or ingredients in traditional medicine. In one 2021 case, a Chinese citizen was extradited from Malaysia to the U.S. and convicted of a money laundering charge related to the smuggling of 1,500 protected turtles valued at $2.2 million.14 Other recent cases involve smugglers facilitating the movement of illicit wildlife products and wildlife through established supply chains across the U.S.-Mexico border. In many instances, wildlife traffickers are using the guise of legitimate businesses, including sales facilitated by online platforms, to sell illicit products and intermingle the proceeds with licit ones.
Most wildlife trafficking criminal investigations result from proactive law enforcement actions and do not originate from financial intelligence. Only a handful of recent U.S. wildlife trafficking cases included a money laundering charge. Of those cases, the defendants were typically organized criminal groups smuggling drugs like cocaine and heroin. Because criminals often regard wildlife trafficking as a low-risk crime, this circumstance offers law enforcement an opportunity to target IWT as the weak underbelly of transnational organized criminal (TOC) groups.
In many instances, wildlife traffickers are using the guise of legitimate businesses, including sales facilitated by online platforms, to sell illicit products and intermingle the proceeds with licit ones
For instance, Operation APEX targets TOC groups engaged in wildlife trafficking, shark finning, drug trafficking and money laundering, and it involves several agencies, including the USFWS, the Drug Enforcement Administration (DEA), Homeland Security Investigations (HSI) and the U.S. Marshals Service. The investigation, which was initiated by USFWS and the DEA, is being conducted under the umbrella of the Organized Crime Drug Enforcement Task Forces (OCDETF).15 Public information in the indictment outlined how the defendants allegedly used sham and front businesses as well as dozens of bank accounts to move and hide proceeds from illegal activities that spanned Mexico, the U.S. and Hong Kong (see Figure 1).16
How to Potentially Mitigate the Risks Related to IWT
In the U.S., international wildlife trafficking cases are prosecuted by the Justice Department’s Environment and Natural Resources Division (ENRD) and U.S. attorneys’ offices. Primarily, the cases are pursued under the Endangered Species Act and the Lacey Act.17 However, the Eliminate, Neutralize and Disrupt Wildlife Trafficking Act (END Act) allows prosecutors to treat wildlife trafficking as a predicate offense for money laundering.18 Because wildlife traffickers rely on the financial system to move, disguise and launder profits, the financial sector is well-positioned to enhance the use of anti-money laundering/counter-terrorist financing preventive measures to detect, report and halt IWT financial flows.
FIs and DNFBPs can take initial steps to protect their organizations from wildlife criminals now and lay the groundwork for partnering with the public sector in the future:
- Risk-based approach: Assess wildlife trafficking in the context of the risk-based approach, given your unique customer base, risk appetite, products, services, etc. For example, FIs with commercial customers engaging in significant cross-border trade could closely monitor transactions involving animal or plant products linked to IWT countries of concern. Also, information from the nonprofit sector can provide FIs with additional context to assess their risk and understand the threat in greater depth.19
- Convergence crime typologies: Understand typologies and risk indicators associated with other serious crimes that converge with IWT, such as drug trafficking and illegal logging, and criminal activity that supports the trafficking supply chain like corruption and trade-based money laundering. Because the laundering of proceeds generated by IWT and other serious crimes can look similar, it is important to understand the context to determine the underlying offense. See the Wildlife Justice Commission Report about crime convergence for more background.20
- Customer due diligence processes: If appropriate, based on risk, ensure your negative news screening teams are tracking IWT-related developments globally, matching this against the relevant customer base, and flagging accounts for enhanced due diligence (EDD) or follow-up. Also, familiarize yourself with what constitutes higher-risk customers related to wildlife trafficking. If appropriate, this can inform how to assess potential customers and monitor existing ones from a risk perspective.
- 314(b) of the USA PATRIOT Act:21 This voluntary information-sharing mechanism is key to fleshing out networks of bad actors. Thus, it can shed light on illicit financial transactions, confirm known individuals and entities involved in a money laundering scheme linked to IWT, provide new leads and verify methods used to launder proceeds. The use of this mechanism has provided value to law enforcement wildlife trafficking investigations by revealing previously unidentified connections between individuals and entities involved in illicit activity across different institutions.22
- IWT risk indicators: Review risk indicators alongside other relevant IWT information to identify suspicious activity (see Table 1).23
With the guidance in this article as a starting point, smaller FIs and DNFBPs should consider assessing their risk exposure to wildlife trafficking to determine whether additional steps are necessary. Although some businesses may not think they are exposed to IWT, a dearth of knowledge increases the chances that this will emerge as a money laundering vulnerability for certain institutions. While a failure to assess the risk may encourage criminals to identify and exploit the least prepared entities, an upfront investment by AML professionals now will help protect their organizations in the future.
Matthew Spivack, CAMS, senior policy advisor, Office of Terrorist Financing and Financial Crime, U.S. Department of the Treasury
Theresa Forbes, senior policy advisor, Office of Terrorist Financing and Financial Crime, U.S. Department of the Treasury
Views expressed in this article are those of the authors and do not necessarily reflect the views of the U.S. Department of the Treasury or the U.S.
- Pervaze A. Sheikh and Katarina C. O’Regan, “Wildlife Trade, COVID-19, and Other Zoonotic Diseases,” Congressional Research Service, February 19, 2021, https://crsreports.congress.gov/product/pdf/IF/IF11494
- K. Nagaraju Shivaprakash et. al, “Mammals, wildlife trade, and the next global pandemic,” Current Biology, July 7, 2021, https://www.cell.com/current-biology/fulltext/S0960-9822(21)00801-0. Twenty-five percent of animals in the wildlife trade host 75% of known zoonotic diseases.
- Adam Popescu, “How did America end up with the world’s largest tiger population?” The Guardian, September 21, 2021, https://www.theguardian.com/world/2021/sep/21/tiger-trafficking-america
- UNEP–Interpol (2014 UNEP); “Illegal Logging, Fishing, and Wildlife Trade: The Costs and How to Combat it,” World Bank, October 2019,
- “2018 National Money Laundering Risk Assessment,” U.S. Department of the Treasury, https://home.treasury.gov/system/files/136/2018NMLRA_12-18.pdf, 2.
- “The CITES species,” CITES, https://cites.org/eng/disc/species.php
- “Money Laundering and the Illegal Wildlife Trade,” Financial Action Task Force, June 25, 2020, https://www.fatf-gafi.org/publications/methodsandtrends/documents/money-laundering-wildlife-trade.html
- Sabri Zain, “Corrupting trade: An overview of corruption issues in illicit wildlife trade,” World Wildlife Foundation, July 2020, https://www.worldwildlife.org/pages/tnrc-introductory-overview-corrupting-trade-an-overview-of-corruption-issues-in-illicit-wildlife-trade
- “Illegal Wildlife Trade Conference: London 2018,” GOV.UK, October 2018, https://www.gov.uk/government/topical-events/london-conference-on-the-illegal-wildlife-trade-2018; “Money Laundering and the Illegal Wildlife Trade,” Financial Action Task Force, June 25, 2020, https://www.fatf-gafi.org/publications/methodsandtrends/documents/money-laundering-wildlife-trade.html; “Financial Investigations into Wildlife Crime,” ECOFEL, January 2021, https://egmontgroup.org/sites/default/files/filedepot/external/ECOFEL%20Financial%20Investigations%20into%20Wildlife%20Crime%20Report%20Final%20.pdf; “World Wildlife Crime Report,” UNODC, July 2020, https://www.unodc.org/unodc/en/data-and-analysis/wildlife.html; “Case Digest: Financial Flows and Payment Mechanisms Behind Wildlife and Forest Crime,” TRAFFIC, March 18, 2021, https://www.traffic.org/publications/reports/case-digest-an-initial-analysis-of-the-financial-flows-and-payment-mechanisms-behind-wildlife-and-forest-crime/; “G7 Finance Ministers & Central Bank Governors Communiqué,” U.S. Department of the Treasury, June 5, 2021, https://home.treasury.gov/news/press-releases/jy0215; “Third Finance Ministers and Central Bank Governors Meeting Communiqué,” Italian G20 Presidency, July 9-10, 2021,https://www.g20.org/wp-content/uploads/2021/07/Communique-Third-G20-FMCBG-meeting-9-10-July-2021.pdf; “Ending Illegal Wildlife Trade - A Comprehensive Overview,” ACAMS, https://www.acams.org/en/training/certificates/ending-illegal-wildlife-trade#overview-35d65314
- “Money Laundering and the Illegal Wildlife Trade,” Financial Action Task Force, June 25, 2020, https://www.fatf-gafi.org/publications/methodsandtrends/documents/money-laundering-wildlife-trade.html; In 2020, the FATF published a report entitled “Money Laundering and the Illegal Wildlife Trade.” As part of the initiative, more than 50 jurisdictions across the FATF global network provided relevant insight and case studies. Notably, the report presents the FATF standards as a framework for countries to address the illicit finance of wildlife trafficking by strengthening their national laws, policies, domestic coordination, international cooperation and partnerships with the private sector.
- “The Private Sector and the Illegal Wildlife Trade,” Financial Action Task Force, July 2020, https://www.fatf-gafi.org/media/fatf/documents/brochuresannualreports/Private-sector-and-iwt.pdf, 4-5.
- “Money Laundering and the Illegal Wildlife Trade,” Financial Action Task Force, June 25, 2020, https://www.fatf-gafi.org/media/fatf/documents/Money-laundering-and-illegal-wildlife-trade.pdf, 18.
- “Budget Justifications and Performance Information Fiscal Year 2020,” The United States Department of the Interior, https://www.fws.gov/budget/2020/FY2020-FWS-Budget-Justification.pdf
- “Foreign National Sentenced for Money Laundering Funds to Promote Turtle Trafficking,” The United States Department of Justice, October 6, 2021, https://www.justice.gov/opa/pr/foreign-national-sentenced-money-laundering-funds-promote-turtle-trafficking. The defendant was sentenced to 38 months in prison for laundering money related to the turtle trafficking ring.
- “International money laundering, drug trafficking and illegal wildlife trade operation dismantled,” U.S. Department of Justice, September 3, 2020, https://www.justice.gov/usao-sdga/pr/international-money-laundering-drug-trafficking-and-illegal-wildlife-trade-operation
- “United States of America vs. Serendipity Business Solutions, LLC, Terry Xing Zhao Wu, Woonjin Lam, Anthony Wu, Billy Chen, Ying Le Pang, Phoenix Fisheries, LLC, Mark Leon Harrison, Heather Huong Ngoc Luu, Lam Phuoc Quang, Kevin Chinh Nguyen, Elias Samuel Castellanos and Terry Louis Shook,” The United States Attorney’s Office Southern District of Georgia, https://www.justice.gov/usao-sdga/press-release/file/1313441/download. An indictment is only a charge and is not evidence of a crime. Defendants are presumed innocent unless and until convicted in a court of law.
- “Wildlife Trafficking,” The United States Department of Justice, https://www.justice.gov/enrd/wildlife-trafficking. Working with USFWS, the National Oceanic and Atmospheric Administration (NOAA), and other agencies, ENRD’s Environmental Crimes Section and U.S. attorneys’ offices have indicted, prosecuted and secured convictions in numerous cases of trafficking in internationally protected species. Federal prosecutors have also pursued charges against traffickers whose crimes threaten domestically protected wildlife.
- “H.R.2494 - Eliminate, Neutralize, and Disrupt Wildlife Trafficking Act of 2016,” U.S. Congress, May 21, 2021, https://www.congress.gov/bill/114th-congress/house-bill/2494/text
- Valuable expertise can be provided by NPOs, such as the Environment Investigation Agency, Focused Conservation, International Fund for Animal Welfare, Jewelers Vigilance Committee, the Jane Goodall Institute, TRAFFIC, Wildlife Conservation Society, the World Wildlife Fund and many others.
- Jenny Feltham, “Convergence of wildlife crime with other forms of organised crime,” Wildlife Justice Commission, May 2021, https://wildlifejustice.org/wp-content/uploads/2021/05/Crime-Convergence-Report-2021.pdf
- Section 314(b) of the USA PATRIOT Act provides FIs with the ability to share information with one another, under a safe harbor that offers protections from liability, to better identify and report activities that may involve money laundering or terrorist activities. Participation in information sharing pursuant to Section 314(b) is voluntary. The Financial Crimes Enforcement Network (FinCEN) published an updated fact sheet about 314(b) in December 2020: https://www.fincen.gov/sites/default/files/shared/314bfactsheet.pdf
- The FATF wildlife trafficking report’s 314(b) case study provides additional background.
- These IWT risk indicators were drawn from the FATF wildlife trafficking report, and they were developed based on the experience of law enforcement agencies from several countries, open-source information and insight provided by the United for Wildlife (UfW) Financial Taskforce and the Basel Institute. The risk indicators should not be relied upon as the only indication of potential suspicious transactions, behavior or profiles. Instead, we strongly urge the use of these types of risk indicators in tandem with the more enduring characteristics and background provided by the FATF report, other reports cited in this article, and numerous nongovernmental organizations and multilateral organizations working on wildlife conservation and wildlife trafficking issues.