The Financial Crimes Enforcement Network (FinCEN) issued a rare but significant alert on April 22, 2024, calling attention to the growing intersection between environmental crimes and financial crime. This alert marked FinCEN’s first formal recognition of crimes such as illegal wildlife trafficking, logging, and unregulated mining as high-priority areas for Anti-Money Laundering (AML) programs.

According to FinCEN, these crimes often generate substantial illicit proceeds, which are then funneled through the formal financial system using complex layering and trade-based money laundering techniques. These transactions frequently involve shell companies, high-risk jurisdictions, and illicit commodity trade. FinCEN advised financial institutions to enhance their due diligence and transaction monitoring controls to detect patterns indicative of environmental crime-linked activity.

The alert outlined key red flags, including unusual cross-border payments to shell entities involved in natural resource trades, discrepancies between shipping and payment data, and transactions inconsistent with customer profiles. It also encouraged institutions to collaborate with law enforcement and environmental protection agencies to share intelligence and better detect these crimes.

This development signals an expansion of AML responsibilities into non-traditional domains. Compliance professionals should incorporate environmental crime indicators into their training, risk assessment frameworks, and monitoring rules. It’s also critical to establish internal escalation protocols that reflect this expanded threat landscape.

Source: FinCEN Reminds Financial Institutions to Remain Vigilant to Environmental Crimes, FinCEN Calls Attention to Environmental Crimes and Related Financial Activity
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