First independent report released on the UK’s record in identifying and mitigating risks of illegal wildlife trade financing

The UK has been at the forefront of encouraging public-private partnerships and global policing efforts to tackle illegal wildlife trade (IWT) and in particular to encourage actors to “follow the money” of IWT abroad. Despite these global campaigns, the UK has lagged in enforcing against IWT and related financial flows within its own jurisdiction.

Very few SARs include information related to IWT, and asset confiscation data showed only £2,455 recovered from IWT cases in 2020. The majority of cases are prosecuted under the Control of Trade in Endangered Species Regulations 2018 (“COTES”) and Customs and Excise Management Act 1979 (“CEMA”) rather than under economic crime legislation such as the Proceeds of Crime Act 2002 (“POCA”). However, even then, only 41 relevant convictions for IWT offences under COTES were identified between January 2016 and July 2021.

In an effort to more seriously address the threat from IWT and associated illicit finance, the UK Home Office commissioned a report from the Royal United Services Institute (“RUSI”) seeking to set out current challenges and recommendations to inform the UK’s response to the Financial Action Task Force’s (FATF) recent proposed actions to identify, assess and address money-laundering risks relating to IWT.

Findings 

RUSI observes that a particular challenge to addressing IWT is the lack of information on the scope of the threat in the UK. Data on seizures is inadequate and may not capture all relevant wildlife crime, for example capturing only globally listed and more popular animals such as elephants or rhinos and not IWT involving plants, timber or lesser known species. The National Wildlife Crime Unit (NWCU) conducts an assessment which draws on various sources, and has concluded that “the UK is implicated as both a transit and destination country for trade in illegal wildlife products, as well as being a source country in some cases.” While the NWCU assessment provides useful insights, according to the report it does not cover all aspects required for a true “official, national IWT threat assessment” recommended to implement the FATF risk-based approach.

For example, one area of IWT which is not yet well-understood or quantified is “cyber-enabled IWT”. Some NGOs undertake periodic online monitoring, but government efforts are lacking. The UK has also failed to assess the overall volume of IWT-linked proceeds laundered in the UK, and the “role of the UK financial system in enabling IWT offences that cause substantial harm elsewhere.” Currently, the UK focuses most heavily on illegal trade (and associated proceeds) that physically takes place in the UK. Additionally, the report observes that the UK fails to consider different categories of offenders, focusing heavily only on serious and organised crime.

Agencies tasked with the enforcement response to IWT in the UK include the NWCU, Border Force, police forces, regional organised crime units and the NCA. Each of these actors suffers from intertwining resource and/or expertise challenges. The limited number of SARs related to IWT is also cited as a challenge to agencies identifying illicit activity and measuring IWT risks. A June 2021 IWT-related keyword search by the UKFIU identified at least 61 SARs received between 2015 and 2020. The total number of SARs submitted to the UKFIU from April 2019 – March 2020 alone was 573,085.

Looking forward

The report concludes that the UK has sufficient legislation to charge IWT-related offences and related economic crime, but “[w]hat appears to be missing is the full application of these powers in relevant cases.” The Home Office has pledged additional funding and resources for IWT-related enforcement, but the report posits that it is still essential to consider how to encourage agencies with responsibility for enforcement to prioritise IWT cases – next steps to improve this include improved data collection of convictions and confiscations, an official UK assessment on IWT, and increased guidance for the private sector.

Financial institution representatives who contributed to the report pointed to the need to improve public-private sector information sharing in the UK. Should a forthcoming IWT threat assessment conclude that there is a significant threat posed to the UK, RUSI suggests that the Joint Money Laundering Intelligence Task Force (“JMLIT”) is the natural forum for public-private sector cooperation on IWT. RUSI also suggests that regulators such as the Financial Conduct Authority (“FCA”) may seek to learn from global best practice on tackling IWT within financial institutions.

Financial institutions (and others) interested in understanding more about IWT can refer to our previous posts here and here.