Chinese banks must crack down on illegal wildlife trade
April 20, 2021
Maddy White, Global Trade Review



Chinese banks are being urged to commit to zero tolerance of illegal wildlife trade, given their high potential for exposure to dealings in Asia and as they become more influential in the global financial system.

New guidance from Traffic, a leading NGO that focuses on the trade of wild animals and plants, states that “expectations of the banking sector and the illegal wildlife trade have yet to be fully codified in China, although the People’s Republic of China’s anti-money laundering law provides a valuable starting point”.

The lucrative trade of illegal wildlife is estimated to be worth between US$7bn and US$23bn a year, with Asia at the heart of the business, according to the World Bank.

The report by Traffic calls on Chinese banks to take action in five areas: make a formal and public commitment to take a no tolerance approach to the trade; establish the systems necessary to deliver such a pledge; ensure know your customer (KYC) processes are followed; report publicly on findings on a regular basis; and collaborate with other banks to better understand how the trade operates.

China is starting to play a more high-profile role in global efforts to combat illegal wildlife trafficking, with Xiangmin Liu, an official at the People’s Bank of China, having held the presidency of the Financial Action Task Force (FATF), an international body for fighting economic crime, from mid-2019 to mid-2020.

Towards the end of that presidency, the FATF published its first global report on the illegal trade of wildlife. It examined how money is laundered through the industry using the international banking system.

It details one US investigation where a criminal group required money for the purchase of illicit wildlife from Africa to be transferred to bank accounts in China before those goods were transported to another country in Asia.

“The customer purchasing the illicit African wildlife in Asia subsequently deposited USD with an ethnic Chinese money exchange broker in Thailand. For a small fee, this money broker in Thailand immediately contacted an associate in China who, in turn, delivered a corresponding amount in RMB into bank accounts in China, all within hours,” it says.

When the funds had been deposited into Chinese accounts, the illegal wildlife was routed to the customer in Asia. This is just one such example of how a web of bank accounts and business associates is spun to facilitate such trade.

Another way wildlife trade is enabled is through so-called special economic zones (SEZs), where policies are more flexible and business incentives are offered. China has established such areas within its own borders but also invests in and heavily influences other SEZs.

A paper by academics in Global Ecology and Conservation in 2018 found that Boten, a town that lies in an SEZ in northern Laos on the border with China, was being used by the Asian powerhouse to facilitate illegal wildlife trade.

The “findings confirm the important and active role Boten plays in the illegal wildlife trade, where an inherent link with China was apparent. All businesses were operated by Chinese nationals, revealed from discussions with the traders. Lao PDR’s Economic Zones are known to cater to largely Chinese markets, including for the illegal sale of wildlife.”

The research found that the 980 individual items, including live animals, their parts and products from at least 13 species of mammals and two species of reptiles observed on the one-day study, were largely for medicinal use.

China has not banned the use of wildlife for medicinal purposes. Yet in February 2020, in response to the outbreak of Covid-19 seemingly from an animal market in Wuhan, Beijing ordered a ban on the trade of wild animals for consumption for health reasons.

Such laws can have a big impact on illegal networks. Smugglers moved ivory worth millions of dollars from Africa to China – its main import market – despite an international ban in 1989. However, when China called time on the processing and sale of ivory products in 2017, demand and prices dropped, and wider illegal trade was subdued.

The Wildlife Justice Commission, a Netherlands-based foundation, found that the price of ivory since China’s ban has decreased from 2017 to 2020, with a notable slump in Laos.
 

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