Tackling Environmental Crime Through Finance

Environmental crime is rapidly becoming one of the most significant global illicit threats, with illegal wildlife trafficking alone generating more than US$23 billion annually¹. Closely linked to corruption, money laundering and organised crime, it presents growing risks not only to biodiversity but to the integrity of the global financial system.

A recent white paper from Baker & Partners provides practical insight into how financial centres, including Jersey, can play a meaningful role in addressing this challenge. As part of Jersey’s Sustainable Finance Action Plan, environmental crime has been identified as a priority area, with a clear focus on upskilling the industry to better identify and mitigate related financial risks.

The paper highlights the scale of environmental crime more broadly, estimated at up to US$481 billion annually², and underscores how weak enforcement and corruption allow criminal networks to operate with limited disruption. Critically, while wildlife crimes are often detected at borders, the associated financial flows frequently go unexamined, enabling profits to be reinvested and criminal activity to persist.

For international finance centres (IFCs), the risk lies primarily in the movement and integration of illicit proceeds as well as reputational damage. Jersey’s role, therefore, is not as a source of predicate crime, but as a jurisdiction that must remain vigilant to the potential for funds linked to environmental crime to pass through its financial system. The report reinforces the importance of robust compliance frameworks, enhanced due diligence and a deeper understanding of client activities and structures.

Practical guidance within the paper is particularly valuable for industry professionals. It outlines high-risk sectors and client profiles, identifies transaction red flags and sets out key due diligence questions to strengthen risk assessment. These include scrutiny of source of wealth and funds, identifying potential co-mingling of legitimate and illicit income, and assessing whether clients have appropriate anti-bribery and environmental policies in place.

The paper also calls for stronger governance, encouraging firms to embed environmental crime considerations into AML and risk frameworks, improve staff training and make greater use of intelligence from regulators and international bodies. Collaboration across jurisdictions and between public and private sectors will be essential to improving detection and reporting.

For Jersey Finance, this work supports ongoing efforts to build industry capability and awareness in line with the Sustainable Finance Action Plan. By equipping financial services professionals with the tools to identify and respond to environmental crime risks, the Island can continue to play a responsible role in the global financial system and strengthen its reputation as a well-governed and forward-thinking IFC.

References:

^{1, 2: p.3 and p.4 Illegal Wildlife Trafficking, Corruption, Compliance & Good Governance}