The first sign that something wasn’t right was when Scotiabank staff noticed a client visiting several branches in Toronto attempting to withdraw a large sum of money.
He had just received a wire transfer from an unknown third party in the United States and now wanted the money in cash. At each branch he offered a different explanation as to why the money had to be withdrawn all at once.
Later, after that unusual transaction attempt was flagged, Scotiabank investigators found an online article that mentioned someone with the same name and age who had been arrested for smuggling exotic animal parts internationally.
This and other unusual activity surrounding that account prompted Scotiabank to report it to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for further investigation into suspected involvement in illegal wildlife trade (IWT).
This example from 2019 demonstrates the role that the financial sector can play in the global fight against the illegal trade, smuggling, poaching or capture of endangered species – activity that generates billions of dollars annually and often funds organized crime and terrorist networks.
Scotiabank has taken that responsibility one step further and become the first Canadian bank to join the Financial Taskforce of United For Wildlife. The non-profit organization founded by Prince William and The Royal Foundation aims to make it impossible for traffickers to transport, finance or profit from illegal wildlife products.
Elephants, rhino and pangolin commonly poached
Signatories to the declaration for the Financial Taskforce play a key role by, among other things, providing training to staff within financial crime compliance functions to better identify and investigate potential illegal wildlife activity. Taskforce members also commit to review intelligence alerts received through the taskforce.
Joseph Mari, Scotiabank’s Director, Financial Intelligence Unit and External Partnerships, hopes that as more companies sign on, it will raise awareness of the illegal wildlife trade and ultimately help law enforcement and regulatory agencies catch the perpetrators who are taking animals and other wildlife from their natural habitat.
“It's motivating because we're doing something about it,” said Mari. “We're helping to uncover it and making a difference, not just passively letting it happen. It motivates the team because people have really personal connections to animals and they care about them.”
Globally, proceeds from the illegal wildlife trade have been estimated at between US$7 billion and $US23 billion per year, or about 25% of the amount generated by the legal wildlife trade, according to a 2020 report by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.
We're helping to uncover it and making a difference, not just passively letting it happen. It motivates the team because people have really personal connections to animals and they care about them.
Animals that are commonly poached and trafficked include elephants, rhino and pangolin for their ivory, horns and scales, respectively.
While there is greater awareness around the connection between money laundering and human trafficking – Scotiabank has participated and formed several public-private partnerships such as Project Shadow and Project Protect to tackle this issue – the illegal trade of animals, plants and other wildlife globally is less known.
One development that has brought the issue to the forefront is that FATF in 2020 said that its focus would be environmental crime, specifically international wildlife trade.
“So that forces the countries around the world to do something because they know that the global body is now singling this thing out,” said Mari. “That's a big motivator for the banks around the world to do something.”
Also, in 2014 Prince William and The Royal Foundation founded United for Wildlife, which has looked to collaborate with the private sector through the Transport Taskforce and the Financial Taskforce to curb the illegal wildlife trade.
Red flags include unusual transactions, media
Scotiabank’s Financial Crime and Risk Management unit had been interested in signing on for several years, but wanted to ensure there was enough internal investigatory training and operations in place, said Mari.
The Bank has held illegal wildlife specific training for several hundred investigators, Mari added, with more in the works.
Red flags that investigators should watch for include unusual transactions that don’t match the client’s business or profile, such as high cash deposits, and activity such as travel to countries where wildlife trafficking is a known problem, said Marsha Phillip, a Manager with Scotiabank’s Special Intelligence Unit, AML Risk. But a key red flag is what’s called adverse media or negative news – any information found in public records, press releases in the news or other reliable sources that connect a person’s name to illegal wildlife trafficking activity, she said.
“There's a bunch of things that we use as parameters in order to define what exactly a positive match is, but mostly name, age, location, date of birth,” Phillip said.
Once it is established that there are enough pieces of evidence to warrant further investigation, Scotiabank will refer those cases to FINTRAC.
We’re pleased to work with Canadian financial institutions in this work, as continued collaboration will help to mitigate the far-reaching and devastating impacts of these crimes globally and further protect the integrity of Canada’s financial system.
“We're not expected to be the judge and jury of these individuals in terms of shutting their bank accounts down or having them arrested,” said Mari. “But we could submit this intelligence to FINTRAC that could be useful to regulators and law enforcement.”
Scotiabank continues to showcase the value that financial intelligence can bring to help identify the criminal networks seeking to profit from the exploitation of vulnerable and endangered species, said Barry MacKillop, Deputy Director, Intelligence, FINTRAC.
“We’re pleased to work with Canadian financial institutions in this work, as continued collaboration will help to mitigate the far-reaching and devastating impacts of these crimes globally and further protect the integrity of Canada’s financial system.”
Phillip said industry investigators continue to get better at spotting potential wildlife trafficking cases, and she is glad the Bank has signed on to United for Wildlife’s Financial Taskforce to help make a larger, global impact.
“What we are doing to the forests and animals of the world is a reflection of what we are doing to ourselves and each other,” she said. “With Scotiabank signing it shows that we want to help the preservation of forests and wildlife globally and we are doing our part to help.”