Reported by Maxwell Radwin

The FACT Coalition, a group advocating for a fair tax system in the U.S., recently made the case that more attention needs to be paid to “financial secrecy” in conservation circles. It’s an often-overlooked part of fighting climate change, deforestation and pollution, its report said, not to mention an overlooked part of the U.S. tax code.

“Economic crime is not often part of the public policy dialogue on environmental protection,” it said. “However, the considerable damage that such crimes have and the significant criminal gains highlight the important role of anti-money laundering in tackling crimes that harm the environment.”

Take illegal mining as an example. In 2018, four Peruvians were indicted by the U.S. for purchasing billions of dollars of illegally mined gold connected to drug trafficking, money laundering and other crimes. They sent billions of dollars in wire payments from the U.S. to several Latin American countries to further the delivery of the gold before getting caught.

Illegal mining is Peru’s most profitable criminal activity, bringing in an estimated $871 million annually, but it’s also its preferred method of money laundering. Around $8.1 billion in illegal transactions linked to mining have been made in the country over the past decade. Corruption and weak oversight make it extremely difficult for U.S. buyers to trace gold to the source.

Illegal logging and timber trafficking operate under a similar dynamic. The U.N. Office on Drugs and Crime has noted an “alarming” increase in recent years, saying the complexity of timber supply chains makes it hard for U.S. buyers to trace where their wood is coming from. Timber, like gold, also converges with other crimes like drug trafficking and corruption. When cartels need to launder money through cattle ranching, for example, they often clearisolated parts of protected forests, with the timber becoming an added revenue stream.

Last year, Mongabay reported on Home Depot’s purchases of plywood sourced from mega-diverse forests like Ecuador’s Chocó, where illegal deforestation has long been a problem. And earlier this year, an investigation found that a member of Cambodia’s military was running illegal logging operations connected to wood furniture products in the U.S.

That kind of crime is only possible because of the lawyers, accountants and trust and corporate service providers who work as intermediaries.

Read full report: https://news.mongabay.com/2023/11/how-the-u-s-financial-system-props-up-illegal-logging-and-mining/