FinCEN Alerts the Rise in Environmental Crimes

Wildlife trafficking. Illegal mining. Hazardous substance trafficking. These are all identified as environmental crimes by the U.S. Department of the Treasury. Department’s Financial Crimes Enforcement Network (FinCEN) declared a warning regarding an uptick in these crimes and their associated unlawful financial activity. FinCEN shared its concern by highlighting the trend due to its ties with corruption and criminal organisations. The ultimate solution is to enhance reporting and analysis of these financial crimes and their contribution to the climate crisis.

Some international organisations estimate global environmental crimes to produce hundreds of billions. Now it ranks as the third-largest illegal activity of the world following the trafficking of drugs and counterfeit goods.  

Current data on crime activities

The organisation revealed that the crimes are growing by 5% per year. Also, in conflict zones, environmental crimes involve exploitation and oil theft which provide 38% of illicit income to armed groups. Thus these crimes wreck human health, nature and natural resources by damaging environmental quality.

 FinCEN sets priorities

FinCEN unveiled its priorities for battling money laundering and terror financing. Therefore, priorities are designed to notify regulated financial institutions as “the most significant AML/CFT threats faced by the United States” and accordingly assist institutions in prioritising compliance resources. The AML Act demands FinCEN to update the Priorities at least once four years for new and emerging threats encountered by the U.S. financial system and national security. The priorities are mentioned

  • Corruption
  • Cybercrime relating to Cybersecurity and Virtual Currency Considerations
  • Foreign and Domestic Terrorist Financing
  • Fraud
  • Transnational Criminal Organization Activity
  • Drug Trafficking Organization Activity
  • Human Trafficking and Human Smuggling
  • Weapons Proliferation Financing

Future Regulations and Supervisory Expectations

The Priorities intend to aid financial institutions subject to the Bank Secrecy Act (BSA) to solve the compliance programs along with assessing the money laundering and terrorism financing risks postured by business activities. As noted above, the Priorities does not give birth to new BSA requirements or supervisory expectations, but FinCEN must proclaim final rules within 180 days of publishing the Priorities. On the other hand, financial institutions need to incorporate the Priorities into their BSA/AML programs when implementing regulations effectively. Moreover, the AML Act dictates that regulators must examine financial institutions’ BSA/AML programs to assure the Priorities are reflected once the rules are in effect. 

FinCEN acknowledges that all Priorities does not apply to every financial institution. Accordingly, financial institutions should reconsider how the Priorities are connected to their business activities and risk profile and assess any modifications to address relevant Priorities effectively. Likewise, several Priorities regard prior FinCEN advisories that interpret risk typologies and red flags and recommend actions to mitigate the risks associated with the Priorities. Sometimes financial institutions may review those advisories for guidance. Although several priorities reflect longstanding threats to U.S. national security and the global financial system, other rapidly evolving threats like domestic terrorism and cybercrime are not adequately addressed.

Read also: Reviving Regulatory Fragmentation Will Spur Cross-Border Payments

From Director’s Desk

The Acting Director Michael Mosier of FinCEN stated that “Today’s publication of government-wide AML/CFT Priorities is a significant milestone in FinCEN’s efforts to enhance the efficiency and effectiveness of the nation’s AML/CFT regime and to foster public-private partnerships. The priorities reflect the U.S. Government’s view of the threat landscape highlighting longstanding threats like corruption, fraud and international terrorism, as well as rapidly evolving and acute threats, such as domestic terrorism, ransomware and other cybercrime.

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