Money Does Grow on Trees: Analyzing the Nexus of Forestry Crime and Money Laundering

Abstract

How effective are anti-money laundering approaches to combat rampant illegal logging and forest destruction in Southeast Asia. In 2017, every second across the world, an area of forest more than the size of a football field was being clear-cut by illegal loggers. In Southeast Asia, more than 30% of the vast Borneo forest has been destroyed through logging, spread of plantations and large-scale industrialization. The rapid depletion of Borneo has threatened the security of hundreds of indigenous communities through land grabbing and degradation of the environment by large corporations and the government. Due to poor forest governance and the prevalence of corruption at the highest level of the state, traditional law enforcement measures have failed to curb this endemic issue. This paper will analyze an alternative approach of implementing anti-money laundering techniques to combat illegal logging and related forestry crimes. Estimates suggest that the criminal activity generates approximately US$10-$15 billion annually across the globe. These funds are often unregulated, untaxed and laundered from the source to different offshore accounts worldwide. The paper will illustrate the typology of illegal logging and money laundering and how an anti-money laundering framework could be effective in tracing the proceeds of illegal logging. By focusing on illegal logging patterns, current anti-money laundering legislation and the role of the state in contributing to deforestation in Indonesia and Malaysia, this paper aims to identify the structure of the criminal network in the region, the convergence of illicit financial flows between different criminal organizations, the role of state officials and the justice system in enabling unlawful activities and the effectiveness of implementing an alternative approach to combat forestry crimes in Southeast Asia.