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Swimming in Dirty Money: It’s Time to Dive Below the Surface

While charismatic species steal the limelight, the failure to address the illicit finance in illegal, unreported and unregulated fishing is a glaring omission.

Let off the hook: fishing trawlers operating illegally together on the open ocean. Image: whitcomberd / Adobe Stock

The global fishing industry may be hidden over the horizon, but its role in feeding the world’s population and economy is immense. About 70% of the planet is covered by oceans; over 3 billion people across the world rely on seafood as a significant source of protein; and the industry is estimated to contribute $1.5 trillion annually to the global economy. Yet despite this, while resources, profile and personalities are committed to combatting the illegal wildlife trade (IWT) and other forms of environmental crime, to date, no coordinated global effort on a similar scale has been made to identify and disrupt the finance linked with illegal, unreported and unregulated (IUU) fishing.

The financial crime world’s success in engaging with the illicit finance dimension of environmental crime has been patchy. For years, key organisations such as the Financial Action Task Force (FATF) – the global financial crime watchdog – were lobbied by a community of NGOs and activists to grant the issue the profile it deserved. The FATF’s regional body in the Asia-Pacific, the Asia-Pacific Group on Money Laundering (APG) – in partnership with the UN Office on Drugs and Crime – was the first to step up to the plate, publishing a review of efforts in the APG region to detect, investigate and disrupt illicit financial flows from IWT in 2017. The FATF followed suit in 2020, triggering varied degrees of energy and engagement from a diverse range of countries across public and private sectors. In 2021, the FATF expanded its focus from merely IWT to include money laundering risks from illegal logging, illegal mining and waste trafficking, but mysteriously ignored IUU fishing. Notwithstanding protests at this absence, the global community of financial crime policymakers demurred; and indeed, despite updating its Standards (p. 121) to include an expanding list of environmental crimes as additional designated categories of offence, the FATF continues to ignore IUU fishing.

Other global bodies, such as the G7, have also shown limited interest. The UK G7 presidency in 2021 made passing reference to the illicit finance dimension of IUU fishing in the environment and interior ministers communiqués; and although not explicitly mentioning IUU fishing, the role of beneficial ownership transparency in combatting environmental crime more broadly featured in the finance ministers statement. Yet none of this amounts to the leadership required to galvanise the international financial crime community to the extent necessary – leadership that only the FATF can offer, given its mandate to assess the financial crime response of jurisdictions around the world.

IUU fishing is a form of criminality that relies heavily on the formal financial system, thus rendering it vulnerable to the interventions available to the anti-financial crime community

This unwillingness of the global financial crime policy leadership to engage IUU fishing is hard to fathom, and likely lets innumerable illicit actors off the hook for their crimes. More so than IWT – the beneficiary of millions of dollars of government and private sector investment, royal patronage, global conferences and taskforces focused on illicit finance – IUU fishing is an industrialised crime involving a wide range of international touchpoints and is increasingly recognised as a form of transnational organised crime. From supermarkets to ports, to the banks that handle the proceeds supporting this global industry, to the professional service providers that set up companies for shipping ownership, IUU fishing is a form of criminality that relies heavily on the formal financial system, thus rendering it vulnerable to the interventions available to the anti-financial crime community.

A Glimmer of Hope?

Of course, none of this is to dismiss the tireless efforts of those dedicated to raising awareness of this form of financial crime, but – as in the past – their efforts are stymied by a failure of policy leadership. This might, however, be about to change.

As was the case with IWT and illicit finance, the APG is again leading the way and may perhaps at last galvanise the global financial crime community to take the issue of IUU fishing seriously. In its recent typologies report, the APG provides an entire chapter on the illicit finance dimension of IUU fishing, including case studies and analysis that underline the industrialised nature of the crime.

Other FATF regional bodies should follow the APG's lead and take the initiative to run their own projects for their members. As the APG has demonstrated, there is no need to wait for the lead of the FATF itself when, in many cases, the impact of IUU fishing is greatest on less developed countries – countries that are typically not members of the main FATF.

It is high time that the financial community shows the same degree of commitment to preventing damage to the oceans as it does to the charismatic species on land

Yet, this does not excuse the FATF from action. Although the FATF's priorities are already set for the next two years, it cannot ignore IUU fishing. Indeed, the new president, Dr Raja Kumar, calls for increased effectiveness of financial crime measures in his Presidency Priorities, including ‘Raising further awareness of the ML/TF risks in relation to … the illegal wildlife trade and environmental crime’. However, the FATF should use this emphasis on environmental crime and expand its focus to specifically encompass IUU fishing as part of its commitment to ‘increased effectiveness’. Just as the FATF has galvanised its members by requiring them to report back on the financial investigation of IWT and other forms of environmental crime, so too should it enforce a similar requirement on IUU fishing; likewise, its members should offer the same degree of funding and focus to IUU fishing as they do to IWT.

It’s Time to Act

IUU fishing is a cross-border crime, committed on an industrial scale and involving a range of other predicate offences for financial crime, such as modern slavery. It generates billions of dollars in profit that need the services of the formal financial sector to facilitate laundering the proceeds back into renewed operations and new infrastructure, including fishing gear, fish processing facilities and transportation. Put simply, it is – in contrast to some other forms of environmental crime – an activity that is highly vulnerable to financial investigation and illicit finance-based interventions.

The fact that, thus far, the international policymaking community – despite its passionate focus on other forms of environmental crime and passing mentions of IUU fishing at G7 meetings – has failed to act is inexplicable. Whereas the topic of IWT has benefited from years-long profile and focus, IUU fishing has been effectively ignored, despite the glaring opportunities available for financial investigation and anti-money laundering measures to support tackling this crime.

Unlike the poaching of wildlife, the destruction of the oceans is out of sight and rarely draws the same degree of celebrity attention as that received by rhinos, elephants and pangolins. Yet the extent to which the oceans feed and support populations across the globe means the impact of this destruction has the potential to be far more threatening. It is thus high time that the financial community – and those that lead it – shows the same degree of commitment to preventing damage to the oceans as it does to the charismatic species on land.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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Original article link: https://rusi.org/explore-our-research/publications/commentary/swimming-dirty-money-its-time-dive-below-surface

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