FACT Coalition Issues Report Analysing US’s Role in Fostering Environmental Crimes

WASHINGTON, DC – As perhaps the easiest place to hide dirty money, the United States has been a safe haven for illicit financial flows from environmental crimes, according to a new report by the Financial Accountability and Corporate Transparency (FACT) Coalition. Environmental crimes contribute to environmental degradation and climate change, as well as threaten national security and public safety.  

The report, Dirty Money and the Destruction of the Amazon: Uncovering the U.S. Role in Illicit Financial Flows from Environmental Crimes in Peru and Colombia, analyzes the linkages between U.S. financial secrecy and environmental crimes in the Amazon region. In fact, environmental crimes, such as illegal mining and forestry crimes, are the third largest type of criminal activity in the world. According to Interpol, they yield as much as $281 billion in yearly proceeds. These proceeds can be easily laundered through US companies and real estate. 

“Environmental crimes have become a key source for money laundering operations of illicit networks and armed groups, which fuel corruption,” said Ian Gary, Executive Director of the FACT Coalition. “With gaping holes in its anti-money laundering regulations, the U.S. has become an attractive place for environmental criminals to launder illicit money.”

The report highlights a number of case studies from Peru and Colombia demonstrating how illicit financial flows from environmental crimes wind up in the U.S. One example includes the second-largest gold export company in Colombia. The company allegedly employed a chain of anonymous companies to launder more than $1 billion and obscure the origin of their gold, which was illegally mined in Colombia. The gold was almost exclusively exported to just two U.S. refineries in Miami that apparently failed to conduct appropriate due diligence checks on the source of the gold. 

Another example involves former Peruvian president Alejandro Toledo, who bought U.S. real estate in Maryland, reportedly to hide and launder approximately $1.2 million of bribes received as part of the Odebrecht scandal. The Brazilian firm admitted to paying hundreds of millions of dollars in bribes to facilitate projects like an interoceanic highway that contributed to the deforestation of the Amazon. 

“From threatening U.S. national security to empowering authoritarians, financial secrecy not only makes our world less safe but has also become a major obstacle to global efforts to combat the climate crisis,” said Susanne Breitkopf, Deputy Director of the Forest Campaign. “It’s clear that nature crimes need to be a stronger part of the global policy conversations around climate change, national security, and domestic governance. The U.S., as a premier supplier of financial secrecy, has a crucial role to play in denying a financial safe haven to criminals that would degrade the environment.”

While the U.S. has a strong anti-money laundering (AML) framework, critical gaps – like the prevalent use of anonymous entities and the failure to bring certain professional gatekeepers, such as lawyers and accountants, under AML rules – make the country susceptible to an influx of illicit financial flows from environmental crimes. 

The report offers a number of recommendations to the U.S. Administration and Congress to help safeguard the U.S. financial system and make it a more robust partner in enforcement, information sharing and capacity building in the Peruvian and Colombian Amazon. Some of these recommendations include faithfully implementing the Corporate Transparency Act; completing rules to establish AML obligations for real estate professionals; making all environmental crimes predicate offenses for money laundering; and supporting the passage of the ENABLERS Act. 

“Civil society groups and government officials in Peru and Colombia have told us it is crucial for the U.S. to collaborate to address financial secrecy, including addressing the scourge of anonymous shell companies,” said Gary. “The U.S. government must ensure that our financial system does not harbor illicit financial fuels fueling environmental degradation in the Amazon and beyond.

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Notes to the Editor:

• Click here to read FACT’s latest report, “Dirty Money and the Destruction of the Amazon: Uncovering the U.S. Role in Illicit Financial Flows from Environmental Crimes in Peru and Colombia”
• A Spanish translation of the report will be available by Friday, November 3, 2023. An executive summary of the report in Spanish can be found here.
• A full recording of the October 26 report launch will be uploaded in the coming days here.