AML Verification for Wildlife Trade – Combating Illegal Flow of Funds

Offenders, after exploiting every other industry, are now targeting the Wildlife sector. With over a loss of $19 billion, it has become the fourth largest criminal trade. Poachers endanger thousands of animals by either hunting or brutal killings. Similarly, their conflict with rangers also put other individuals’ safety at stake. This does not end here, wildlife also involves high sums of money laundering and funding of organized financial crimes. 

In order to fight the long chain of Illegal Wildlife Trade (IWT), the department requires AML solutions. Due to rapid shifts towards digital banking, it has become easier for criminals to flow their illicit funds across global financial systems through IWT. To place barriers in their way, the wildlife trade department needs to incorporate better AML verification mechanisms. The blog provides detailed insights into IWT.

AML Security Solutions and Illegal Wildlife Trade (IWT) – A Detailed Overview 

Money laundering through IWT affects both integrity of the region and businesses operating within it. Criminals exploit social media, digital payment systems, banks, and other such intermediaries to move their illicit funds. This helps them steer clear of the AML compliance checks. Since Financial Action Task Force (FATF) brought IWT into the spotlight, World Wide Fund for Nature (WWF) and Association of Certified Anti Money Laundering Specialists (ACAMS) is placing necessary actions in place to combat this crime. 

IWT affects individuals as well as businesses despite their location and realm. As this type of money laundering is expected to dramatically rise, the following consequences are sure to come;

A Severe Threat for Businesses

IWT is becoming a serious threat for companies involved in this trading. Criminals target companies rather than initiating on their own. This makes businesses vulnerable to sanctions and hefty penalties because of non-compliance with AML monitoring laws. 

As per the Sixth Anti Money Laundering Directive (6AMLD), the regulatory bodies can hold responsible both individuals and firms for not preventing flow of ill-gotten funds. Moreover, businesses facilitating poachers for money laundering within Germany can experience a fine of more than €1 million while the managerial staff can face imprisonment for 5 years. Therefore, to avoid the chances of hefty penalties, businesses need to establish better AML compliance programs. 

Ever-Growing Loss of Biodiversity

Due to poaching millions of plants and animals come on the verge of extinction. In return, they not only affect the social stability of individuals but also endanger the overall nature. Moreover, industries, as well as societies, can face a major deficiency in the availability of medicines, food supplies, and other necessities. 

Furthermore, money laundering through IWT also drives economic and reputational damages for the overall region. This calls for businesses to employ better anti money laundering mechanisms. 

AML Verification Services – Mitigating Spread of IWT-Based Money Laundering Chains 

IWT-based money laundering does not necessarily involve the use of institutions such as banks. Criminals also target non-financial services like real-estate companies. The process involves offenders targeting a source country which refers to a region that is enriched in wildlife. Businesses lacking efficient AML solutions are more likely to serve as their medium for illicit flow of funds. 

Moreover, criminals also target countries that are not linked to IWT such as Europe to escape AML monitoring. Hence, businesses operating in whatever region can be directly or indirectly influenced by illegal transfer of funds through wildlife trade. More details regarding the types of this money laundering are in the next section. 

Use of Shell Companies 

Criminals use shell companies to use as a legal front and hide their source of funds and launder high revenue by using IWT. Primarily, fraudsters transfer value among members of their trade union and later between buyers/sellers. This way they steer clear of AML compliance as well as company verification checks. Similarly, criminals use import/export businesses to further shield their malicious activities. 

Criminals also transport plants and expensive body parts of animals such as elephants’ tusks across borders. However, this leads the region to non-compliance with AML security standards. In order to ensure legitimacy and secure wildlife trade, regulatory bodies are putting anti-money laundering regulations in force. As per the guidelines, businesses need to build efficient AML compliance programs.  

Funds Transfer Through Third-Party Companies

For seamless movement of illicit funds and escaping AML screening checks, criminals use third-party money transfer companies instead of banks. These firms have fewer regulatory checks in contrast to other financial institutions. 

Moreover, the use of intermediaries makes money laundering ​​unnoticeable while helping criminals escape the AML compliance checks. Furthermore, due to the rapid adoption of payments through social media accounts, online markets, and digital fund transfers, the chances of IWT are dramatically increasing.  

In a Nutshell

While regulatory bodies are taking actions to make the financial sector secure and free from criminal threats, fraudsters are going otherwise. By using sectors with lax AML compliance checks, they somehow manage to launder big sums of money. Similarly, criminals are making the wildlife trade vulnerable by making it a medium to clean their illicit funds. To combat economical, regulatory, and social repercussions, businesses require effective AML solutions.

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