Environmental Crimes Money Laundering National Risk Assessment

Ingenia consultants
June 02, 2024



The Financial Action Task Force (“FATF”) revised its glossary in October 2021 to set out examples of environmental crimes. Countries should pay attention to environmental crimes, including criminal harvesting, extraction, or trafficking in protected species of wild flora and fauna (e.g., illegal wildlife trade and destruction of protected trees), precious stones and precious metals and other natural resources (e.g., illegal gold mining, illegal logging), and waste (e.g., trafficking hazardous industrial waste, illegal dumping)). The FATF also clarified that countries should consider environmental crimes irrespective of whether they are a source, transit, or destination country.

Regionally, Southeast Asia is home to some of the world’s largest illicit wildlife markets and plays a key role in the transportation of high-value, highly endangered, and illegally sourced wildlife for the regional market, other parts of Asia, and the global markets. The most common trade route for shipments seized in transit through Singapore is between Africa and East Asia. Southeast Asia is also home to transnational organised criminal networks involved in environmental crimes, including those that operate via large national and multinational enterprises at all levels of the supply chain from the source to consumer markets.

As an international financial centre and an international trading, transport and transhipment hub with a highly externally oriented economy and geographically located along the supply routes to countries such as China, Vietnam, and Indonesia, Singapore is vulnerable to these illegal trade flows. However, based on data from law enforcement authorities, the financial intelligence unit and the Attorney General’s Chambers, the money laundering threat arising from environmental crimes does not appear to be high. Nonetheless, law enforcement agencies have managed large transit seizures arising from environmental crimes in Singapore and the region.

Singapore’s legislative framework is aligned with FATF’s definition of environmental crimes under the FATF Glossary and covers a range of environmental crimes concerning flora and fauna, natural resources, and includes offences which are designated as money laundering predicate offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (“CDSA”). Nonetheless, Singapore authorities are reviewing the foreign environmental crime threats that Singapore is exposed to and intend to expand the scope of the CDSA by 2024 to include relevant environmental offences (including those which emanate overseas but do not have a direct domestic equivalent, e.g. illegal logging, illegal waste trafficking) as predicate offences.

Environmental Crimes and Money Laundering Typologies

International typology reports indicate that the laundering of proceeds from environmental crimes occurs across source, transit, and destination countries. Singapore’s key environmental crime money laundering threats emanate from (i) illegal wildlife trade, (ii) illegal logging relating to timber, and (iii) trafficking of hazardous waste. The typologies associated with these environmental crimes money laundering threats include trade-based money laundering, misuse of shell companies, corruption and bribery, and tax evasion. These risks, especially with respect to illegal wildlife trafficking, have materialised.

  • Illegal wildlife trade: Asian countries have been involved in the transportation and transit of high-value, highly endangered and illegally sourced wildlife for regional and global markets. Shipments of illegal wildlife products, namely pangolin scales, ivory parts, and rhinoceros horns, have been confiscated in Singapore.
  • Illegal logging: The placement and layering of laundered proceeds from illegal logging and illegal timber trade are likely to take place in regional financial centres closer to forests, such as Singapore in the case of Asia. However, to date, Singapore has not detected cases of illegal CITES[1]-listed timber trade.
  • Trafficking of hazardous waste: More recently, syndicates have turned their attention to Southeast Asia as a primary destination for waste, to be disposed of or stored illegally.

Additional offences facilitate and result from environmental crimes.

  • Corruption: Corruption can fund or facilitate (i) the illegal acquisition of environmental goods/resources or (ii) the subsequent transnational movement of the illegal products/resources.
  • Tax evasion: Environmental crimes may also converge with tax evasion when criminals attempt to avoid payment of (i) the duties and taxes on the environmental goods traversing borders and (ii) the taxes owed to authorities for use of the public land. Additionally, criminals may use offshore banking or corporate structures outside the jurisdiction where the environmental crimes were committed to avoid paying taxes on the illicit proceeds derived.

Sectors at Risk

Key sectors in Singapore that are vulnerable to being misused to launder proceeds from environmental crimes are briefly discussed below. Other sectors not specifically identified were assessed to have lower risks and exposure, considering known environmental crimes money laundering typologies and existing anti-money laundering (“AML”)/countering the financing of terrorism (“CFT”) controls.

  • High-risk sectors
    • Banks: The banking sector is commonly used to launder environmental crimes proceeds. Banks may be exposed to environmental crime money laundering risks through financing trade in illegal environmental goods and dealing with criminals looking to park their illegally obtained proceeds (including from environmental crime) in Singapore.
    • Cross-border money transfer services (remittance agents): Remittance agents are a common channel misused by bad actors to launder proceeds from environmental crime. International typologies suggest that remittance agents are misused in all three stages of the money laundering process, placement, layering and integration, and unlicensed remittance channels (e.g. Hawalas) are used to facilitate the flow of money laundering funds.
  • Medium-high-risk sectors
    • Money changers: International typologies suggest that bad actors smuggle cash across borders by using money changers to convert cash into higher denomination notes, especially foreign notes.
    • Corporate service providers (“CSPs”): Criminals can misuse companies incorporated through corporate service providers as a front company to move and hide illegal proceeds or as a shell company to hide beneficial owners to launder proceeds from environmental crimes.
    • Virtual asset service providers (“VASPs”): There is a rising number of known cases of virtual asset payments on the dark web connected to other forms of illicit trade. Virtual assets enable bad actors to mask their identities and the origins of funds. Hence, they are an emerging risk area that all countries need to be vigilant of.
    • Casinos: Criminal networks use casinos to facilitate wildlife trafficking. The casino industry is largely cash-based, and cash can be used to purchase casino chips which act as a store value and can be accepted as an alternative to money.
  • Medium-low-risk sectors
    • Licensed trust companies and external asset managers (“EAMs”): Trust companies and EAMs manage and invest high-net-worth individuals’ (“HNWI”) assets and monies through the establishment of trusts and fund vehicles, respectively. These intermediaries may be complicit in placing and layering illicit funds that certain HNWIs could have obtained from corruption or tax evasion.
    • Payment service providers (others): Pre-paid and gift cards are stored value facilities which can be used to transfer and make payments for environmental goods.
    • Real estate agents, precious stones and precious metal dealers, life insurers: Businesses with dealings which could be cash intensive or provide a store of value may be involved in money laundering at the integration stage.

All the above service providers are subject to AML/CFT controls through legislation, including customer due diligence. Accordingly, they should ensure that they properly implement measures to prevent environmental crimes money laundering.

For any further information, please contact:

Rolf Haudenschild


Ingenia Consultants Pte. Ltd.


[1] Convention for International Trade in Endangered Species of Wild Fauna and Flora