The FOREST Act Would Make Illegal Deforestation a Predicate Offense for Money Laundering
Today, the Financial Accountability and Corporate Transparency (FACT) Coalition commended the introduction of the bipartisan Fostering Overseas Rule of Law and Environmentally Sound Trade Act, or FOREST Act, in both the House and Senate. This legislation institutes a framework for the United States to deter commodity-driven illegal deforestation around the world. As part of this framework, the legislation adds illegal deforestation as a specified unlawful activity, or “predicate offense”, to the U.S. money laundering criminal statute.
“As the world’s largest economy and reserve currency, the U.S. must play a part in cracking down on the illicit proceeds of nature crimes, which constitute the third most profitable crime in the world,” said Ian Gary, executive director of the FACT Coalition. “The FOREST Act gives our prosecutors additional tools to hold criminals involved in illegal deforestation to account. By passing the bipartisan FOREST Act, Congress would send an important signal at home and abroad that the U.S. is a willing partner in tackling environmental degradation.”
While the United States both has and wields extensive statutory authority to prosecute money laundering, U.S. law stops short of including environmental crimes in foreign jurisdictions – for instance, illegal deforestation, illegal mining, or illegal timber trafficking in the world’s most vulnerable locations – as specified unlawful activities. In practice, this means that U.S. prosecutors do not have all the tools they could use to go after the range of actors implicated in illicit deforestation. This gap in U.S. statutes can additionally hinder international cooperation in what are typically transnational cases.
The United States is already vulnerable as a destination for the world’s illicit funds. In March 2023, Treasury Secretary Janet Yellen said in a speech, “There is a good case that, right now, the best place to hide and launder ill-gotten gains is actually the United States.” In its 2016 evaluation of the United States, the Financial Action Task Force (FATF) indicated that the failure to include environmental crimes, such as illegal deforestation, as a predicate offense for money laundering was a deficiency in the U.S. anti-money laundering framework. Other jurisdictions, including the European Union, have already done so. A move to add environmental crimes as a predicate offense would be in line with international standards, including Resolution 10/6 and and Resolution 11/3 under the UN Convention Against Transnational Organized Crime (UNTOC).
In addition to updating the U.S. money laundering criminal statute, the FOREST Act would prohibit U.S. imports of agricultural commodities produced on illegally deforested land – the single biggest driver of tropical rainforest destruction. It would also oblige companies sourcing from regions where deforestation and associated crime are rampant to trace their supply chains back to their origin and show that the goods were produced in compliance with local laws.
“The U.S. is a significant market for imported commodities and associated products linked to deforestation and human rights abuses, such as palm oil, cocoa and cattle,” said Susanne Breitkopf, Deputy Director of the Forest Campaign of the FACT-member Environmental Investigative Agency. “This groundbreaking bipartisan bill would establish the U.S. as a leader in global efforts to halt deforestation and associated environmental and financial crime.”
In October, the FACT Coalition released “Dirty Money and the Destruction of the Amazon”, which detailed the U.S. role in enabling illicit financial flows from environmental crimes in the Amazon basin. The report highlighted how weaknesses in the U.S. anti-money laundering framework abet those intent on destroying the environment.
“U.S. law enforcement must have all the needed tools to combat environmental crimes, including making foreign environmental crimes a predicate offense,” said Gary. “Passage of the FOREST Act would be an important step to help protect threatened ecosystems in the Amazon and beyond.”
Notes to the Editor:
- Click here for the reintroduced text of the FOREST Act.
- Click here for the joint press release from Senators Schatz (D-HI) and Braun (R-IN), as well as Representatives Blumenauer (D-OR) and Fitzpatrick (R-PA).
- Click here to read FACT’s October 2023 report, “Dirty Money and the Destruction of the Amazon: Uncovering the U.S. Role in Illicit Financial Flows from Environmental Crimes in Peru and Colombia,” which contextualizes the need for and endorses the FOREST Act.