Wildlife Trafficking & Illicit Financial Flows:The Role of Financial Investigation

8 November 2016

RUSI, finance and environmental crime• RUSI: defence and security think-tank• Range of security-related (not just military) programmes

• Financial crime (Tom Keatinge)• Centre for Financial Crime & Security Studies

• Policy focus: UK, EU, FATF, etc

• Application of finance as security tool (CTF, HT, CPF)

• Partner with other RUSI programmes to bring ‘financial angle’

• Environmental crime (Cathy Haenlein)• IWT and IUU

Topics for discussion

• Wildlife trafficking: setting the scene

• Wildlife trafficking as terrorist financing?

• Wildlife trafficking as illicit trade and AML predicate offence

Setting the scene

• Poaching v’s trafficking

• Conservation v’s security

• Wildlife crime v’s financial crime

• Agent v’s principle

IWT is illicit trade and predicate AML offence

Quantifying environmental trafficking

• Narrow definitions: $7-23bn (2014, UNEP, INTERPOL)

• Wider definitions: $70-213bn (14), $91-258bn (16), +5-7%

• 4th largest illicit activity (after drugs, human trafficking, counterfeiting)

• Wide uncertainty range, variation in estimates, inconsistent data collection, variation in seizure record, volatility in prices

The pricing incentive: ivory as an example

The supply chain: ivory

The supply chain: rhino horn

IWT value chain

Wildlife trafficking as a security threat

• Not traditionally viewed as a security threat: environmental security literature, conflict resource literature

• View of wildlife trafficking as a conservation, regulation issue

• Recent change this decade – rise of 3 narratives:• Poaching, wildlife trafficking and terrorism

• Poaching, wildlife trafficking and organised crime

• Poaching, wildlife trafficking and human security

Wildlife trafficking and terrorism• Are terrorist groups earning significant revenues from

illegal ivory trade?• Al-Shabaab, LRA, Janjaweed

• The narrative is strong• Research and conservation NGO campaigns/reports

• Media (Western and East African)

• High-level political statements

• Main assertions related to Al-Shabaab• Involved directly in poaching

• Plays a major role in ivory trafficking

Wildlife trafficking and terrorism (cont’d)

Wildlife trafficking and terrorism (cont’d)• Hillary & Chelsea Clinton (2014):• ‘We have seen al-Shabaab from Somalia, the Janjaweed from Sudan, the Lord’s Resistance Army in

east Africa and other armed groups move into illegal wildlife trafficking. It has become a

multibillion-dollar business…’

• Uhuru Kenyatta (2014):• ‘The money gained from the callous business [elephant poaching] is usually directed into funding

terrorism’

• Uhuru Kenyatta (2014):• ‘The war against poaching should be treated as a double-edged sword, which decimates two evils

at once’

Why has the narrative been propagated?• No one likes poachers or terrorists – combining the two

makes a good story• ‘Softer’ way for the Western security community to

frame increased CT intervention in Africa• For NGOs and private security firms: a way to tap into

CT funding from Western governments (over conservation or counter-organised crime funding)

• For Kenyan citizens, security forces and ministers, it continues a long-standing process of externalising and politicising Kenya’s security problems, in particular blaming Somalia

‘An Illusion of Complicity’

• Exaggerated benefit• At most small-scale, ad hoc,

opportunistic and indirect involvement

• Conflation of Somali poachers with Al-Shabaab – trend of blaming Somalis

• Few herds within easy striking distance of Al-Shabaab

• Majority of poachers come from communities in major ranges

• Most East African poaching has occurred in Tanzania

IWT as financial/organised crime

• The role of organised crime and corruption at all levels of the chain is far more pervasive

• Booming demand and prices – emergence of transnational, industrial-scale and organised operations

• Growing evidence of OCG involvement. In East Africa, accepted that OCGs/corrupt officials are main facilitators

IWT as financial/organised crime (cont’d)

• Huge scale/complexity, clear indicators of OC involvement, enabled by high and low-level corruption

• This is evident by the difficulties involved in:• consolidating the hundreds of tusks necessary to make up the large volumes involved;

• moving them across multiple borders along complex supply chain (air/land/sea routes)

• and avoiding interdiction at each stage of these chains

IWT as financial/organised crime (cont’d)

• Growing % of ivory seized in ‘large’ shipments of >500kg – CITES determinant of OC facilitation

• CITES data: frequency of seizures has increased this decade. Prior to 2009, an average 5 such events occurred annually; 2009-13 rose to an average of 15

• 2012-14, such seizures accounted for 61% of all ivory confiscated worldwide

Tackling IWT as a financial crime

• RUSI HMG-funded project investigating illicit financial flows related to IWT in Kenya, Tanzania, Uganda

• Desk-top research; phone and field interviews• Private sector; local law enforcement; FIUs; anti-corruption offices; ODPP; NGOs; multi-lateral

organisations

• Next phase: in-country training for public/private sector

IWT: illicit trade, linked to OC and corruption

Yang Fenglan: Chinese national, 70 tusks, 1.9 tonnes, US$1.4 million, in court

Feisal Mohamed Ali, Kenyan national, 2 tonnes, jailed for 20 years – big success.

IWT: response must be shaped accordingly• Countries have made progress tackling ‘wildlife crime’

• Reduced poaching of rhino/ elephant (eg 80% in Kenya)

• New laws (cf Kenyan Wildlife Conservation & Management Act, 2013)

• But…• More ivory shipped through Mombasa than any other African trade route

• Financial investigation techniques underused

• Network analysis not exploited

• Link between IWT and AML/financial crime not exploited

• Rare use of financial evidence in court

• Who pays bail and fines?

Considering responses

• Champion financial investigation• Apply financial crime legislationPublic Sector

Capacity Building

• IWT spans the globe; so do financial institutions• Support training for correspondent banks• Develop awareness in transport/logistics

industry

Private Sector Involvement

• Raise IWT profile in appropriate for a addressing financial crime and illicit trade, e.g. FATF/OECD

• Industry efforts; cf Royal Foundation logistics initiative

International Support

Thank you and questions…?

• Tom Keatinge, Director• RUSI Centre for Financial Crime & Security Studies

• Tel: +44 7785 363 259

• Email: tomk@rusi.org

• Cathy Haenlein, Research Fellow• Environmental Crime Research

• Tel: +44 7762 718 992

• Email: cathyh@rusi.org