Wildlife crime is intrinsically linked with money laundering. In 2019, the United Nations (UN) General Assembly adopted two resolutions which explain the seriousness of wildlife crime due to the potential for its high profitability and transnational nature. The resolutions call upon UN members to recognise illegal wild species trade (IWT) as a predicate offence for money laundering.

Despite new investigative powers for law enforcement and judicial authorities to dig deeper into IWT through a financial lens, these laws have had little practical application in investigations and prosecutions.

This report “A Review of China’s Anti-Money Laundering Laws on Combating the Illegal Trade in Wild Species: A Comparative Analysis of National Legislations in the United States, the United Kingdom, and China” released by TRAFFIC, explores the suitability of China’s current AML framework, as well as the Draft Amendment on AML, to combat wildlife-related crimes in three aspects: legislation and enforcement; supervision and administration; and international collaboration.

legislation and enforcement

This study found that China’s current policy and practice in legislation and enforcement limits the successful enforcement of IWT-related AML investigations. 

In China, only seven crimes are considered predicate money laundering offences - a crime that is a component of a more complex criminal activity – one being smuggling. Existing legislation only acknowledges that wildlife crime is linked to money laundering when there is smuggling of protected species of animals and plants, excluding broader wildlife crimes, like poaching, illegal logging, and illegal scale. It is complicated further by a narrow scope of criminal intent, resulting in challenges in prosecuting offenders on money laundering charges when they are using the proceeds of crime to fund wildlife trafficking activities.

Rules about ways to recover assets after conviction have yet to be fully established, limiting the effectiveness of this approach to IWT cases. China’s current AML framework lacks active engagement with overseas financial institutions, making it difficult to trace or investigate the entire chain of illegal movement of money overseas.

It’s hoped that this comprehensive analysis could serve as important foundation and guidance to strengthen Chinese law enforcement and judicial sectors’ capacity in the investigation, prosecution, and conviction of wildlife crime cases through the lens of financial approaches.”

Linda Chou, Author of this report, AML project manager of TRAFFIC China Programme.

Supervision and Administration

China's current financial compliance system covers fewer high-risk sectors for money laundering compared to the United Kingdom and the United States of America. China’s AML regulatory authorities rely heavily on large and suspicious reports from financial institutions, making it difficult to gauge the full extent of laundering through non-financial institutions. This limits their ability to assist law enforcement in tracking illicit financial flows from wildlife cases.

This report also finds opportunities to develop and improve how information is shared between public and private sectors, and between wildlife, forestry government actors and key AML investigators. The People’s Bank of China (PBC) regularly convenes Inter-ministerial Joint Conferences on Anti-Money Laundering to stimulate information exchange between departments yet public-private engagement is lacking.

Countries everywhere, including China, who wish to combat wildlife crime using anti-money laundering techniques, can learn from the valuable recommendations within this report, including the strength of public-private partnerships, the importance of inter-agency collaboration, and the value of conducting wildlife-related financial investigations.”

Anne-Marie WEEDEN, Senior Research Fellow, RUSI

International cooperation

China’s efforts to combat IWT through financial investigation may be constrained by solely relying on international financial intelligence exchange via a few bespoke bilateral agreements, limiting the quantity and quality of its data.

International police cooperation channels, such as INTERPOL alerts or international police liaison requests, are the primary approaches by Chinese police. However, these efforts are constrained by limitations of national laws and other disincentives for overseas law enforcement officials.

Multiple central authorities have complex decision-making structures that may lead to delays or a lack of response from overseas legal assistance. These time-consuming processes could hinder China’s future attempts to receive judicial support from other countries.

This report allows the international community to better understand how AML measures could be applied to combat wildlife crime in China and contribute to international law enforcement and mutual judicial assistance in the future."

Stephanie PENDRY, Senior Advisor, Information and Enforcement Support, TRAFFIC

Filling the gaps

The 2021 Draft Amendment on AML could address many gaps in the existing Anti-Money Laundering Law. If enacted, it could raise China's AML standards to international levels in the fight against wildlife crime.

The draft amendment emphasises tackling money laundering through all industries and broadens organisations’ AML obligations.

Provisions of extraterritorial reach and engagement with overseas financial institutions could aid in investigating and tracing illicit funds involved in wildlife trafficking and other predicate offences. Passing this amendment is crucial for detecting money laundering linked to wildlife trafficking earlier.

Recommendations

Like many other crimes, following the money through illegal wildlife trade chains can expose high-ranking members within criminal networks, as well as disrupting the funding of criminal activities. The report lays out steps for different authorities to encourage more collaboration and use of investigative techniques. For example:

Lawmakers/legislators - Ensure the passage and enactment of the Draft Amendment on AML and expand the scope of predicate criminal acts to include broader links to more wildlife-related crimes.

AML administrative authorities - Enhance the inter-departmental, public-and-private, and international communication and financial intelligence sharing.

Central authorities responsible for receiving requests for judicial assistance - Improve the mechanism of judicial assistance, to increase the efficiency of responses to requests and promote a sound international cooperation experience with other countries.

Law Enforcement Agencies - Improve the awareness and capacity to identify and detect concealed illicit items and conduct financial investigations utilising international criminal justice channels when handling cases involving cross-border money laundering and fund transfers.

Financial and Designated Non-Financial Institutions - Enhance the ability of financial and non-financial institutions professionals to monitor and identify suspicious transactions in IWT cases.

 Useful links

 E-course

Illegal Wildlife Trade Toolkit

Report: Illegal Wildlife Trade and the Banking Sector in China