Why should organizations be concerned about illegal wildlife trade?

The risk of illegal wildlife trade. Five years ago, illegal wildlife trade was not on the risk radar of most companies, including financial institutions and companies involved in international trade. Wildlife protection and illegal wildlife trade were often seen as a conservation issue. Since the Covid-19 pandemic hit the world, more and more organizations are recognizing the importance of combating illegal wildlife trade and preventing the risk of becoming complicit with wildlife traders.

Risk of illegal wildlife trade

In fact, the pandemic, likely caused by illegal wildlife trafficking, has helped to put the issue in the global spotlight. Fortunately, companies in the transportation and financial sectors had already begun to realize that they were exposed to the risks of abuse by wildlife traders.

Illegal wildlife trade exposes businesses to a variety of risks, not just those directly related to wildlife and its protection. Illegal wildlife trade overlaps significantly with money laundering, financial crime, drug trafficking, human trafficking and threat financing, as well as climate change and humanitarian welfare issues. For example, heroin trafficking networks in East Africa are also known to be heavily involved in the ivory and rhino horn trade. Illegal logging almost always overlaps with high-level corruption and kleptocracy, and is itself a major driver of climate change.

As organizations begin to understand that wildlife trade intersects with all of these issues, corporate risk managers, compliance and anti-financial crime professionals are realizing that they need to include wildlife trade in their risk assessment and mitigation processes. Until now, however, wildlife trade has been a major blind spot for most.

These vulnerabilities are now being recognized in international policy and regulatory circles. Indeed, private sector efforts are being stimulated by increasingly stringent laws and regulatory involvement.

For example, the EU’s 6th Anti-Money Laundering Directive, which came into force in December 2020, has made environmental crime a predicate offence for money laundering.

China and FATF

When China chaired the Financial Action Task Force between 2019 and 2020, the FATF announced that illegal wildlife trade was “one of the priorities under the Chinese chairmanship.” The FATF then recently launched a project “to develop best practices for addressing the financial flows associated with illegal wildlife trade. This project will analyze common supply chains and payment methods, as well as case studies of countries with experience in investigating the financial flows of illegal wildlife trade.”

It will also consider the role of public-private partnerships and international cooperation in combating this crime.” The first outcome of this project was the FATF’s first-ever report on “Money Laundering and the Illegal Wildlife Trade”, published in June 2020. In its report, the Financial Action Task Force calls for legislation for private sector oversight. For example, the FATF proposes to require relevant financial and non-financial institutions to identify and assess their exposure to money laundering risks related to illegal wildlife trade and to take appropriate mitigating measures, as part of a broader risk-based approach. Regulations are certain to become stricter in the coming years.

These regulatory changes demonstrate that the illegal wildlife trade is no longer seen as a conservation issue, but as a serious transnational organised crime, with implications for both law enforcement and business.

Business risk

On the corporate side, companies are under increasing pressure from investors and asset managers to mitigate risks related to environmental, social and governance issues, also known as ESG. The transportation and financial sectors are most clearly affected. Illicit products such as elephant ivory, rhino horn and timber are usually traded via commercial land, sea and air transport services, and financial transactions are conducted via regulated financial services providers and the global banking system. However, other sectors are also involved. E-commerce and social media sites can be exploited as illicit trading platforms, and logistics or warehousing companies can unwittingly facilitate the storage and shipping of illicit goods.

Either way, the pressure on organisations to take action has increased with Covid-19. Crucially, this involves ensuring integrity and sustainability throughout the company’s supply or financial transaction chain. Demonstrating that a company is not fuelling organised crime or contributing to habitat destruction, even down to raw material suppliers, is a big part of that.

Why is illegal wildlife trade such an important problem?

Illegal wildlife trade has numerous negative effects on human welfare and species conservation. When criminals trade in endangered species, they devastate entire ecosystems and jeopardize vital links in the world’s biological diversity. Biodiversity loss is one of the most serious global threats we face today, and it also means a shrinking gene pool and, as a result, less resilience to diseases of all kinds.

Criminal wildlife trafficking networks also threaten the ability of states to combat disease outbreaks, as they force governments to divert human and financial resources that could be used for other purposes.

Final thoughts

United Nations organizations and UN-affiliated treaties and agreements, such as CITES, the Convention on Biological Diversity, or the Convention on Migratory Species of Wild Animals, provide tools, resources, platforms, and expertise to governments around the world. Organizations such as the United Nations Environment Programme help implement and coordinate critical programs on the ground that contribute to achieving the Sustainable Development Goals related to biodiversity. At the same time, CITES and other multilateral environmental agreements provide a global, legally binding framework for wildlife and biodiversity conservation, often helping to build bridges between governments, the private sector, and civil society so that everyone can contribute to this shared and critical mission.