fishing-aml

Concerning our coasts – money laundering and trafficking in global fishing

The catastrophic effects of the global fishing industry have never been so readily accepted as now. Environmental agencies focusing on our waters and their complex natural systems – such as Sea Shepherd in the UK – have worked tirelessly to bring environmental harm to the public eye. In the same way that the deforestation of the Amazon and ever-more-apparent climate change triggers (including scarily fickle weather changes of present) are now being acted upon, so too the microscope finally looks at how fishing contributes to damaging environmental and societal problems.

On the surface is the concern for animal welfare – the continued threat of fishing debris killing important aquatic life systems – but hidden further from view is how illegal fishing and money laundering contributes to widespread human, sex and drug trafficking. With the unveiling of the recent Seaspiracy documentary shining a light on such matters, the contributions of transnational organisations, financial institutions and charities has gained extra traction, forcing us to confront the issues behind the fish that lace our plates.

Concerning our coasts

With the world’s oceans making up around 70% of Earth’s surface, it should hardly be surprising that its conservation is a large priority, but money laundering from the entire fishing chain extends beyond the world’s waters. Whether fish are caught in illegal fishing areas, illegitimately transported by boat or indeed on land, or even sold over the internet, it is tough to track the beginnings and ends of the journeys from the creatures’ natural habitats to our food stalls.

In a recent paper by Ocean Panel, they cite a 2020 report that indicates that gross revenues between $8.9 billion and $172 billion are siphoned out of legal fishing through illicit trade. 85% of the total catch losses linked to the illegitimate fishing market are known to take place in Asia, Africa and South America. These areas that comprise coastal areas are exploited for purely profit-driven reasons, and can cause large societal problems for towns, cities and nations whose reputation is built upon the fisheries sector. This disruptive problem of illegal trade on coastal areas has become more prominent during the current covid-19 pandemic, also.

It is tough to evade smugglers. For instance, financial institutions and port authorities are increasingly looking to advanced trade based money laundering (TBML) screening and analysis, as illegal fishing tradesmen can over-value or misrepresent their stock to fool gatekeepers for various reasons. In the Caribbean for instance, whereby basic goods such as baby products and oil can be difficult to source, Venezuelan fishing vessels are used to trade weapons and drugs for these commodities in Trinidad and Tobago.

On land and sea

It is not just the shipping of commercial goods that make up this disturbing picture. Elsewhere, human rights violations have been found to be linked with fishing vessels, some of which have been operating for many years. Interpol had been monitoring an Indonesian pirate vessel – named Viking – which has been believed to have illegally fished in three of the world’s oceans and using document fraud to continue as a covert ship, undetected.

Forced labor is conducted in these illegal fishing trips, with human beings trafficked cross-borders on land and sea respectively. The International Labour Organization (ILO) has outlined eleven indicators for a forced work situation; mainly conducted in illegal fishing to reduce costs in a labor intensive, low profit industry. The risk of the use of forced labor on fishing vessels, especially those fleets involved in Illegal Unlicensed and Unregulated Fishing (IUUF), has been further outlined through 6 risk factors by the Global Slavery Index 2018 study. In 2015 for instance, Indonesian officials discovered 322 migrant fishers from neighbouring Burma, Laos and Cambodia housed in a fish factory. Whereby trafficked individuals are discovered at ports, their lack of documentation and passports (being withheld by ship captains) causes fear of being arrested as illegal immigrants, their plight and status as trafficked individuals not fully realised. Other reported cases of widespread use of forced labor in fishing include the use of thousands of Cambodian victims on Taiwanese fishing vessels off the coast of Africa between 2009 and 2014, or the widespread use of thousands of Indonesian victims on South Korean fishing vessels off the coast of New Zealand between 2009 and 2015.

Illegally farmed fish, drugs, mis-represented cargo and even humans all make up the lowest level of detection in advanced organized crime networks that use TBML techniques to evade authorities. Any worldwide trading comes a cropper to the difficulty in tracking individuals, companies and nations that are involved, as the cross-border activity causes confusion among which jurisdiction has prosecution rights. Documents are often forged – as was the case with the Viking above – officials and authorities bribed, and ultimate beneficial ownership of vessels goes undetected without well-regulated checks. As far as the financials go, proceeds are laundered through shell companies in financial havens, set up by advanced organized criminal networks that regulators and financial institutions have difficulty flagging due to lack of information. All of this is extremely detrimental too to the reputation of countries that rely on fishing for a large chunk of their international trade, such as Norway and areas of South East Asia.

Tracking the trade

In 2008, the UN General Assembly issued a non-committal warning that there existed a ‘possible connection between international organized crime and illegal fishing in certain regions of the world’. Luckily, the examination of the threat posed by illegal fishing has come a long way in the past decade to now be on the agendas of national governmental agencies, financial institutions and even the general public, which is now far more aware of its seafood consumption.

Since, member countries in Interpol established a Fisheries Crime Working Group in 2013 committed to investigating maritime crime, from which Project Scale has published several Purple Notices on forced labour and fishing, and as recently as 5 March 2020 the Copenhagen Declaration has received support from 28 nations. Also looking into transnational crime related to fishing, most of these signatories were territories highly dependent on marine resources. Organizations and individuals alike can make use of Global Fishing Watch – a handy open source tool that uses satellite information to track and investigate maritime and vessel data. Another useful resource is the Combined IUU Vessel List, curated by Trygg Mat Tracking, which provides the best available up to date information on all fishing vessels that appear on the IUU vessels lists published by Regional Fisheries Management Organisations (RFMOs) and related organizations.

While Indonesia has been aforementioned as a hotspot for illegal fishing crimes, the Indonesian Law 25/2003 on the Crime of Money Laundering goes a step further to hold banks and financial institutions to make suspicious transactional information available for law enforcement to crack down on the accounts of suspected launderers. As just one jurisdiction, due diligence needs to become commonplace for banks across the globe for the global illegal fishing trade to be minimized. Insurers and lease financing companies that work with vessels should adopt screening measures – using such tools as Global Fishing Watch – to assist in tracking companies that they work with. This alternative data, coupled with vast data sources including adverse news, can help banks to map the movements of money from multiple individuals, UBOs, and companies that make up these complex trading networks.

This can of course be difficult given the cross-jurisdictional activity of imported and exported fish and other goods, hence why the transparency of information between financial companies, environmental and human rights organizations, and worldwide governments can be key in quashing the activities of known traffickers and launderers. As the world is further educating itself on the origins of its seafood through increased environmental concern, charitable efforts, and fishing tracking tools, financial institutions must act on this awareness to help eliminate the far-reaching and horrifying depths that illegal fishing can reach.

For further information, check out our webinar featuring Steve Farrer and David Buxton: Identifying human trafficking through AML and alternative data.