Global wildlife trafficking is on the rise, adding a dimension to transnational crime and increasing the risk that U.S. corporations could unwittingly become entangled in the illicit trade.
A new white paper by Moody’s Analytics highlights the growing risk for private enterprise, and the growing involvement of transnational crime in wildlife smuggling.
“Brands sometimes are involved in supply chains and they might not truly know who their supplier is,” said Richard Graham, Third Party Risk Management lead at Moody’s Analytics.
“If you’re doing business with someone that is a supplier that is involved in some sort of wildlife trafficking, via animals or probably more likely the wood from different endangered trees, that’s a very bad story for your brand. It impacts reputational risk, and also it’s probably illegal.”
Beyond reputational risks, wildlife trafficking is driving extinction, deforestation — particularly in the Amazon — as well as corruption at all levels of government.
The practice has also become an attractive market for transnational criminal organizations such as drug cartels, which can use the practice to avoid money laundering sanctions.
“The large Mexican criminal groups, the Cártel de Sinaloa and Cártel de Jalisco Nueva Generación are also involved in a wide variety of legal and illegal economies: timber, legal fishing as well as illegal fishing, water distribution and legal agriculture, are also increasingly involved in wildlife trafficking,” said Vanda Felbab-Brown, an expert on international organized crime at the Brookings Institution.
“And they are paying in wildlife and timber products to Chinese criminal groups for their supply of precursor chemicals for the production of fentanyl,” Felbab-Brown added.
According to a United States Financial Crimes Enforcement Network report cited by Moody’s, financial information reviewed from 2018-21 showed a 154 percent increase in wildlife trafficking during that period.
But that financial information does not cover schemes like the cross-Pacific trade in kind between Mexican cartels and Chinese criminal organizations.
The wildlife trade is also attractive to large criminal enterprises because it doesn’t require involvement throughout the entire supply chain, and because there is a large gray area where illicit goods can filter into the formal economy.
In the Americas, for instance, much of the wildlife for trafficking is sourced from small-scale poaching operations, particularly for local markets.
“It is very rudimentary, very much geared towards the domestic market. So a large portion of animals that are being trafficked — and you know this from knowing the region — often get trafficked in a way that people don’t think of them as being trafficked,” said Steven Dudley, co-director of InSight, a program that tracks crime in the Western Hemisphere.
That small-scale traffic also has repercussions beyond environmental impact — the Moody’s report cited related corruption at all levels of authority, “from low-level park rangers to high-ranking government officials.”
Yet some forms of sourcing in the Americas involve broader networks and large-scale environmental damage, for instance trafficking animals captured from areas of Amazon jungle that have been illegally cleared.
“There is a convergence there where you’ve got loggers starting to get involved with drugs and you’ve got drugs, drug dealers and drug manufacturers, getting involved with wildlife and illegal green crimes, and because it’s still a crime, it’s lucrative, and you can converge because it’s the same routes,” Graham said.
According to the report, the entry of organized crime into the wildlife trafficking environment has increased “the ability to move multi-ton commercial shipments of wildlife.”
While there are areas of convergence between wildlife trafficking and other types of international crime, that’s not the case for all species.
“You still have many wildlife trafficking networks that are highly specialized in wildlife trafficking,” Felbab-Brown said.
“This is especially true when wildlife trafficking entails live animals, such as birds or reptiles, where the knowledge needs to be much higher. In cases where the trafficking is of parts of dead animals — ivory, rhino horn — it’s far easier for any criminal group [to develop] the logistics to smuggle.”
Most major jurisdictions including the United States and Europe have robust legislation to fight trafficking, and the U.N. convention that regulates the practice currently has 170 member nations, but wildlife trafficking still receives less attention than other aspects of international crime.
In the United States, Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) division is in charge of investigating and prosecuting wildlife trafficking.
Though some aspects of the HSI’s work on wildlife trafficking are equivalent to other international law enforcement and smuggling operations, there is one key distinction.
“A crucial but inadequate part in combating drug trafficking is drug seizures. Drug seizures matter because they raise prices,” Felbab-Brown said.
“Doing seizures in wildlife trafficking is not just inadequate, it’s directly counterproductive.”
While drug seizures do raise prices, they also cause distributors to order an increase in production, Felbab-Brown explained.
“How does a wildlife trafficking network adapt to seizures? It orders a larger number of killing of animals. So instead of killing 20 animals, traffickers may decide that if they will have 80 percent losses of seizures, they will order the poaching of 100 animals.”
And Felbab-Brown said persecution of wildlife trafficking is an important way to go after large criminal groups, rather than just focusing on drug interdiction.
Still, the United States remains a magnet for the activity both because of high demand and because the country’s vast financial system presents opportunities to hide proceeds, according to the Moody’s report.
“While Americans may have moved beyond the Tiger King craze of 2020, the country still has a big cats — and other wildlife trafficking — problem,” Graham said.