Commingling Environmental Crime Proceeds

Criminals intermix illicit proceeds from illegal environmental activities with legitimate commercial revenues and supply chains, ultimately making the funds appear lawfully sourced. This final stage effectively injects the laundered assets into the mainstream economy.

The use of shell or front companies with opaque beneficial ownership exploits vulnerabilities related to customer identity and ownership structures. This allows criminals to conceal their involvement in environmental crimes and obscure the source of illicit proceeds.

Criminals primarily exploit trade and commercial product vulnerabilities by falsifying documentation (e.g., trade invoices), misrepresenting product origin or quantities, and embedding illicitly harvested resources within legitimate supply chains. These measures leverage trade finance complexities to commingle illegal proceeds from environmental crimes and disguise them as routine commercial transactions.

Offshore corporate structures and multi-jurisdictional operations obscure illicit proceeds by moving them through countries with weaker AML oversight or secrecy laws, further complicating detection and investigation.

• Encompasses official records on cross-border movements of goods, shipping routes, and declared categories.
• Cross-checks declared exports or imports of environmental or wildlife products against actual shipments.

These records help detect misdeclared or concealed goods, identifying potential commingling of illicit shipments with legitimate trade flows.

• Provides pricing indices, origins, and historical or current market trends for various commodities.
• Identifies transactions priced significantly above or below typical benchmark values for environmental or wildlife goods.

This data source flags inflated or undervalued trades indicative of laundering or commingling illicit proceeds.

• Contains records of commodity trades, including volumes, prices, counterparties, and transaction dates.
• Pinpoints anomalies in trade patterns for environmental or wildlife commodities, such as sudden spikes or repetitive transactions.

This data aids in identifying suspicious trading activity and the potential laundering of proceeds from illegal resource extraction.

Identify high-risk regions for illegal logging, overfishing, or mining corruption, and assign heightened risk ratings to entities or transactions tied to those jurisdictions. Apply stricter controls and ongoing monitoring to discourage the integration of environmental crime proceeds into the official economy.

Apply deeper scrutiny to high-risk environmental trade clients by verifying chain-of-custody records, validating environmental or resource extraction permits, and mapping corporate ownership to detect hidden beneficiaries. This mitigates the use of layered corporate structures and forged documentation concealing illicit proceeds.

For environmental or natural resource traders, confirm the authenticity of business registration, licensing, beneficial owners, and physical operations. Cross-check official government or NGO databases to identify front or shell companies that could be used to channel illicit environmental proceeds into legitimate trade flows.

Implement targeted rules for tracking cross-border payments associated with the environmental sector. Look for sudden spikes, cyclical transfers, or counterparties lacking clear business operations. Investigate any unusual flows that may indicate layering or commingling of illegal environmental funds with legitimate revenues.

Assess and continuously monitor agents, suppliers, or logistics partners handling environmental goods. Validate their licensing, capacity, and chain-of-custody protocols to ensure they are not complicit in mixing illicit products with legitimate shipments.

Educate trade finance and onboarding personnel on specific red flags for environmental crime, such as false chain-of-custody documents, mismatches between declared product types and shipping records, or suspect beneficiary structures. Equip staff to quickly escalate these unique indicators of commingling.

Leverage public records, industry databases, and NGO reports to verify environmental licenses, shipping logs, and declared beneficial owners. Cross-referencing these external sources can uncover forged documents or undisclosed owners behind front companies that are commingling illicit environmental proceeds.

Collaborate with environmental authorities, customs agencies, and industry groups to exchange insights on known traffickers, suspicious supply chains, and common documentation fraud methods. This cross-sector intelligence helps preempt attempts to blend illicit environmental proceeds with legitimate trade.

Regularly verify that environmental trade activities, beneficial owners, and licensing remain consistent over time. Quickly investigate unexpected increases in product volumes, sudden new trade routes, or changes in ownership that may reveal newly introduced illicit proceeds.

Systematically compare shipping documents, commodity codes, and invoices against credible market data and official permits. Identify misclassifications, falsified volumes, or irregular pricing of environmental goods that may indicate the commingling of illicit products with legitimate cargo.

• Criminals deposit proceeds from illegal environmental activities (e.g., unauthorized logging or mining) into accounts nominally operated by front or shell companies.
• By mixing illicit funds with legitimate revenues, they obscure the original source of proceeds and begin layering through additional transfers.
• Standard banking channels, including cross-border wires, help disguise the illicit origin of transactions under legitimate business operations.

• Shell companies secure letters of credit for the purported import/export of environmental commodities, masking irregularities in product origin or valuation.
• Banks often focus on document compliance rather than substance, enabling criminals to layer illicit proceeds under the guise of trade finance.
• The cross-jurisdictional use of letters of credit adds further transactional complexity, hindering AML tracing.

• Criminals manipulate shipping documents, bills of lading, or customs forms to misrepresent the nature and value of environmentally sourced goods.
• These instruments legitimize cross-border transactions, allowing illicit proceeds to enter mainstream commerce under the guise of normal trade activities.
• The complexity and volume of international trade transactions create opaque layers, complicating efforts by authorities to trace illicit funds back to environmental crimes.

• Front companies may issue bearer shares, enabling ownership transfer merely by handing over physical share certificates with no formal registry.
• This anonymity frustrates beneficial ownership inquiries, allowing environmental crime proceeds to flow through corporate channels undetected.
• Bearer shares further complicate efforts to track funds, facilitating the layering of illicit revenue across multiple jurisdictions.

• Shell or front companies issue falsified invoices for environmental commodities, concealing illicit funds as receivables from purported trading activities.
• By inflating or forging invoices, criminals create a paper trail that appears legitimate, embedding illicit proceeds into routine commercial billing cycles.
• This manipulation of trade documentation camouflages product type, quantity, or origin, concealing the actual criminal source of funds.

• Criminals hold equity stakes in front or shell companies that handle proceeds from illegal environmental activities.
• These entities present a façade of legitimate business operations, blending contaminated funds with genuine commercial income.
• Obscured ownership structures help hide the beneficial owners, making it harder to link the proceeds to their source in environmental crimes.

• Physical currency from environmental crimes (e.g., illegal timber sales) can be introduced into the financial system through structured deposits.
• These deposits are commingled with lawful business turnover, making it harder to isolate proceeds tied to illicit environmental activities.
• The anonymity of physical cash enables initial placement without clear transactional traces back to the origin of the funds.

• Criminals can mix illicitly harvested goods (e.g., timber, fish, minerals) with legitimate shipments, masking the origin and nature of contraband.
• Falsified shipment documents help conceal or misrepresent the quantity or type of cargo, facilitating unhindered cross-border transport of illicit environmental proceeds.

• Providing or handling trade paperwork that can be forged or manipulated to misrepresent product type, volume, or origin.
• These falsified documents enable the commingling of illicitly sourced environmental goods with legitimate supplies, masking the true source of revenue.

• Criminals can falsify or inflate trade invoices related to environmental or natural resource products, allowing them to embed illicit proceeds within seemingly legitimate cross-border transactions.
• By exploiting letters of credit or documentary collections, they disguise the illicit origin of funds and layer them across multiple jurisdictions.

• Allows for deposits and transactions in jurisdictions with strict confidentiality or reduced oversight, distancing proceeds from the point of environmental crimes.
• Facilitates layering and reinvestment of illicit funds derived from environment-related offenses, making tracing more difficult for authorities.

• Enables the formation of companies in jurisdictions with limited transparency, allowing criminals to hide the ultimate beneficial owners of entities used to handle illicit environmental crime proceeds.
• By layering funds through multiple offshore entities, they reinvest illicit revenue into apparently legitimate sectors.

• Facilitates the creation and administration of front or shell companies used to commingle illegal revenues with lawful business activities.
• Nominee shareholders or directors obscure the true beneficial owners, complicating AML inquiries and enabling further layering of funds derived from environmental crimes.

They engage in the illegal trade of protected wildlife or wildlife products, generating illicit proceeds that are then commingled with lawful business flows. By using forged trade documentation and shell entities, they mask the true nature and origin of these goods, complicating financial institutions' ability to detect suspicious transactions related to wildlife trafficking.

By issuing or facilitating letters of credit and documentary collections, these institutions can be unwittingly used to integrate illicit proceeds from environmental crimes. Criminals:

• Present forged invoices or fraudulent shipping documents to secure trade financing.
• Route funds across multiple jurisdictions in a manner that complicates financial institutions' transactional reviews.

They help establish and administer corporate entities—often unwittingly—for criminals involved in environmental crimes by:

• Registering shell or front companies used to mix illicit and legitimate revenues.
• Offering nominee or directorship services that obscure actual control.

Such arrangements hamper financial institutions' ability to confirm beneficial ownership or detect atypical account activity.

They generate proceeds from illegal logging, unreported fishing, or unauthorized mining. By embedding or mixing these illicit funds within legitimate supply chains and business operations, they obscure the origin of the money. This commingling hampers financial institutions' ability to detect unusual transactions or trace beneficial owners involved in environmental crime.

They create falsified or altered trade documentation, such as invoices and shipping records, that misrepresent product quantity, type, or origin. These forged documents enable criminals to:

• Move illicitly harvested resources across borders as though they were legitimate goods.
• Deceive financial institutions and customs authorities by disguising the true nature of the transactions.

These entities, established with minimal active operations, are used to:

• Conceal beneficial ownership and hide true control structures.
• Commingle illicit profits from environmental crimes with legitimate income streams.

Unclear operational activities and falsified corporate records hinder financial institutions’ customer due diligence efforts and mask the true source of funds.

Criminals exploit these companies—whether knowingly or unknowingly—to:

• Transport illicitly harvested commodities alongside legitimate goods.
• Use manipulated shipping documents to conceal or misrepresent cargo origin and quantity.

This concealment frustrates financial institutions' ability to identify suspicious transactions linked to environmental crimes.

These business structures are formed in jurisdictions with limited transparency, enabling criminals to:

• Obscure beneficial owners involved in illegal logging, fishing, or mining.
• Layer and transfer illicit funds across multiple countries, distancing proceeds from their criminal origin.

This reduces financial institutions’ ability to identify and scrutinize the ultimate beneficiaries of environmental crime proceeds.