WWF has collaborated with Themis, a financial crime software company, to launch a pivotal Environmental Crime Financial Toolkit.
The unveiling took place at the COP16 nature summit in Cali, Colombia. This open-access platform is designed to empower financial institutions to detect and monitor illicit activities tied to land conversion and deforestation effectively. It marks a significant step in minimizing the financial sector’s vulnerability to environmental financial crimes, which are estimated by INTERPOL to amount to US$110m-281m annually, growing by 5 – 7 percent each year.
The necessity for the new product stems from the alarming growth of environmental crimes, now ranked as the third largest illegal activity worldwide. Financial institutions face critical knowledge and procedural gaps in handling proceeds from crimes related to deforestation and land conversion, creating significant vulnerabilities within the global financial system.
WWF and Themis play critical roles in environmental and financial sectors by developing tools and strategies to address these crimes. Their efforts are directed towards enhancing the financial industry’s capabilities to identify and manage environmental risk factors involved in their operations.
The toolkit functions by equipping firms with the necessary resources to strengthen their screening processes, whether reviewing existing clients or onboarding new ones. It highlights red flags and risks associated with various types of environmental and financial crimes, aiding in comprehensive risk assessments across the financial landscape.
Additional features of the toolkit include its integration into existing systems of financial firms, facilitating a seamless adoption process. It offers practical digital resources that firms can implement to bolster their defenses against environmental financial crimes.
Further implications and benefits of this toolkit were explored in a joint introductory report by WWF and Themis, titled ‘Financial Crime and Land Conversion: Uncovering the Risk for Financial Institutions.’ The report highlights substantial gaps in land conversion risk policies among financial institutions, emphasizing the urgent need to address these issues from both financial crime and ESG perspectives.
WWF CEO Tanya Steele commented, “Our natural world underpins every aspect of our societies and economies, yet we continue to witness its large-scale destruction – global wildlife populations have fallen on average by 73% since 1970. “Despite its rapid growth, environmental crime is rarely seen as a serious risk by financial institutions, but it in fact poses significant reputational and material risks to their operations, such as the potential of sanctions for enabling illegal activity. Environmental crime is therefore very much an economic as well as a conservation issue.”
Themis CEO Dickon Johnstone remarked, “The financial sector is potentially exposed to environmental crime risks through numerous business activities, including investment, trade finance and insurance. This naturally poses a threat from an ESG and reputational perspective but what’s more, the extensive convergence between environmental crime and other financial crimes can expose firms to serious legal and regulatory risks. Our hope is that this Environmental Crime Financial Toolkit will help firms to understand and mitigate these risks, thereby protecting themselves and wider society and the environment from the devastating impacts of environmental crime.”
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