Takeaways on Illicit Finance and Land Corruption: Implications for Nature

Speakers: Robert Mwanyumba, Independent Consultant; Marcello De Maria (Phd), Project Manager, WWF-UK; and Patrick Bwalya, Citizens Engagement Officer, Transparency International Zambia

• Land is both a source and a destination for illicit financial flows (IFFs), with several associated risks. These include land acquisition, where money laundering and the creation of corporate vehicles facilitate the transfer of illicit proceeds through the purchase and sale of assets. Land transfers also pose risks as land is used as an asset during resource exploration activities. Furthermore, resource-rich land is particularly vulnerable, as the exploitation of valuable resources often involves financial misconduct during exploration and extraction processes, further linking land to illicit financial activities.

• The effects of illicit financial flows (IFFs) on land are far-reaching and damaging. They contribute to the displacement of communities, particularly in regions where natural resources are being exploited. Housing crises are exacerbated as real estate acquired through money laundering inflates property prices, making it difficult for legitimate buyers to compete. Environmental degradation also results from illegal mining and other unregulated activities, causing significant land damage due to weak regulatory oversight and rampant corruption. Additionally, the pervasive influence of IFFs weakens governance by eroding the credibility and effectiveness of government institutions and enforcement agencies.

• To counter the linkages between illicit financial flows (IFFs) and land, several key recommendations were proposed. First, risk-based mapping should be implemented to address the weak regulation of the real estate sector, identifying risks at each stage of land acquisition, use, and transfer. This involves analyzing the roles of enablers at every step. Second, improving land governance is crucial, particularly through context-specific governance tools that prioritize the development of robust land registries and transparent processes for land ownership, transfer, and use. Lastly, Beneficial Ownership Transparency (BOT) is essential in revealing the natural persons who ultimately own or control land assets, ensuring greater transparency and accountability in land dealings.

• The Environmental Crimes Financial Toolkit developed by Themis and WWF-UK is an online platform that assists Financial Institutions (FIs) in monitoring and managing the risks related to land conversion, including deforestation (and more broadly environmental crimes) that could be linked to financial crimes. Different resources included in this platform will help FIs strengthen protocols when reviewing existing clients, onboarding new clients, and assessing sectoral risks.

• Why do we need the Environmental Crimes Financial Toolkit? Environmental crimes, costing society between $110 and $281 billion annually, are growing 2-3 times faster than the global economy. These crimes often intersect with financial crimes—such as tax evasion, bribery, and money laundering—and human rights violations. Financial institutions (FIs) are increasingly exposed to risks due to their involvement with high-deforestation commodities like cattle, soy, and palm oil. Despite this, over 60% of surveyed FI professionals reported lacking policies to address land conversion risks. Regulatory changes, including the European Union Deforestation Regulation (EUDR) and United Kingdom's Deforestation Due Diligence (UKDD), are rapidly advancing to address deforestation, biodiversity loss, and human rights violations in global supply chains.

• The case of illicit logging of Mukula in Chipili Luapula Province highlights the role of high-ranking officials in facilitating the illegal trade of mukula timber, contributing to environmental destruction and forest loss in Zambia. The Environmental Investigation Agency (EIA) report also reveals how state-owned Zambia Forestry and Forest Industries Corporation (ZAFFICO) used its authority to cover up illegal timber trading, sometimes protected by the army, and issued fraudulent export certificates for timber sent to China. TI-Zambia worked closely with traditional leaders, the timber association and other stakeholders to unveil the magnitude of the case.

Useful resources:

• The Environmental Crime Financial Toolkit is accessible free of charge and empowers the detection and prevention of criminal activity linked to deforestation and land conversion.
• Video introducing the Environmental Crime Financial Toolkit
• The case of the illicit logging of Mukula in Chipili Luapula Province
• Slides on the linkages between illicit financial flows and land
• Slides on the Environmental Crime Financial Toolkit
• Slides on the illicit logging of Mukula in Chipili Luapula Province

The full recording of the presentations from 14 November Land Corruption working group meeting is available here: