FATF should promote whistleblowers as resource in fighting financial crimes like international wildlife trafficking

by Laura Peterson, Senior Research Advisor
FATF should promote whistleblowers as resource in fighting financial crimes like international wildlife trafficking

As a new report demonstrates, the international community is beginning to give illegal wildlife trafficking the attention it deserves. Trafficking endangered or protected animal species poses a major threat to human health, ecological biodiversity and the global financial system, but regulators and law enforcement agencies have struggled to combat it to date due to its underground natures and the complex criminal networks that make it possible.

The United Nations Environment Programme estimates the value of the illegal wildlife trade at $23 billion per year. The UN General Assembly called upon its members in September 2019 to pass laws treating wildlife trafficking as “predicate offenses for money laundering,” since proceeds from the trafficking of wildlife are laundered similarly to those from drugs or weapons sales.

The Financial Action Task Force (FATF), an independent body that advises governments on combatting money laundering and terrorist financing, released its first report on wildlife trafficking in June 2020. FATF’s report identifies illegal wildlife trafficking as a “major transnational organized crime that fuels corruption, threatens biodiversity, and can have significant public health impacts” including zoonotic diseases like COVID-19.

The report found that previous inattention to the issue had resulted in a lack of information and resources to fight the problem. For example, few countries used tools deployed against other types of money laundering such as interagency coordination, asset recovery, or review of suspicious transaction reports. In fact, the FATF report says most known cases of wildlife trafficking were identified through customs seizures and “human sources” such as whistleblowers.

Yet none of the government actions proposed by FATF in its report involve supporting these human sources. The report recommends that countries assess their vulnerability to trafficking as an origin or transit point, encourage collaboration between law enforcement agencies, and reach out to the private sector, among other guidelines. International whistleblower laws aren’t mentioned, nor is the fact that whistleblowers can make confidential disclosures—and collect awards— about wildlife trafficking under U.S. law.

The omission reflects the gaping hole in FATF’s International Standards on Combatting Money Laundering and the Financing of Terrorism and Proliferation. FATF was created by the Group of Seven (G7) countries in 1989 to counter a rise in money laundering related to drug trafficking—since expanded to include terrorism, weapons of mass destruction and other illicit activities—and its capstone document lists 40 recommendations for safeguarding banks from criminal activity. These recommendations, updated in October 2020, cover everything from recordkeeping to collaborating with global antifraud task forces, but never address the crucial role of whistleblowers.

Studies and statistics have shown that whistleblowers play a critical part in detecting economic crimes around the world and have unique access to high quality information about crimes that otherwise may be difficult for enforcement officials to discover. Under powerful U.S. whistleblower laws such as the Foreign Corrupt Practices Act and Securities Exchange Act, whistleblowers around the world can come forward with evidence of criminal activity, even if it occurs outside of U.S. borders. Nearly 4,000 whistleblowers from 123 countries filed claims in the U.S. between 2011 and 2019, according to the U.S. Securities and Exchange Commission.

Whistleblowers can also find protection in wildlife protection laws. Laws such as the Lacey Act and Endangered Species Act include provisions related to protections and monetary rewards for persons who disclose original information concerning wildlife crimes that results in a successful enforcement action. Additionally, he RAWR Act, recently passed by the U.S. Congress, added wildlife trafficking as a covered offense under the State Department’s whistleblower reward program.

By omitting whistleblower protections from their recommendations, international bodies such as the FATF are surrendering an effective weapon in fighting wildlife crimes. Hopefully the increased attention to illegal wildlife trade will result in future recognition of whistleblowers’ important contributions.

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