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 legislation

Public 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