Targeted Financial Sanctions: A Key Tool to Disrupt Illegal Wildlife Trade?

As awareness of the vast profits generated by illegal wildlife trade (IWT) has grown, so too has interest in the potential to use targeted financial sanctions against high-value wildlife criminals. Here, as for other undesirable behaviours, financial sanctions are viewed as a potential means to coerce individuals into behaviour change and constrain their access to related profits and resources to continue their offending behaviour.

Mindful of this, in June 2020, the Financial Action Task Force (FATF) stressed the ability of countries to ‘rely on other disruptive measures [against IWT], such as use of targeted financial sanctions’. It encouraged them ‘to apply dissuasive sanctions against criminal entities ... that are part of IWT syndicates where more commonly applied sanctions are not practicable’.

In June 2021, similarly, the Global Initiative Against Transnational Organized Crime called on G7 countries to treat sanctions as ‘critical elements of a toolkit that would tackle illicit environmental markets more efficiently’, urging G7 states ‘to consider how to more fully leverage the potential of targeted sanctions, and apply them to serious violations linked to environmental crime’.

Some limited precedent exists. In 2018, the US Office of Foreign Assets Control (OFAC) imposed financial sanctions on the Zhao Wei Transnational Criminal Organization – a network engaged in wildlife, drug and human trafficking, and money laundering in Laos’s Golden Triangle Special Economic Zone. OFAC also designated four individuals and three entities in Laos, Thailand and Hong Kong for ‘materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of the organisation, or for being owned or controlled’ by those designated. This saw designees’ assets under US jurisdiction frozen and US persons prohibited from transacting with them.

Despite calls for an expanded use of sanctions to tackle IWT, little analysis exists on the impact of this approach. The FATF notes that the Zhao Wei example ‘demonstrates the use of targeted financial sanctions ... to prevent the organisation’s proceeds entering the financial system’, but offers no assessment of the disruptive impact on the group’s IWT operations. Beyond this, few examples have seen individuals or groups involved in IWT designated under US or other regimes.

As such, in urging an expanded use of financial sanctions against IWT offenders, it is critical to recognise the limited data available on effectiveness.

The Options Available

Existing sanctions regimes offer a range of options for designating criminal actors engaged in IWT. A number of OFAC-administered sanctions programmes address various forms of related transnational criminal activity, including those established by the Foreign Narcotics Kingpin Designation Act, Executive Order 13581 of July 2011 (Transnational Criminal Organizations) and Executive Order 13818 of December 2017 (Global Magnitsky).

In Europe, a move beyond country-wide sanctions toward targeted sanctions offers further options. The UK’s independent anti-corruption sanctions, for example, could potentially target individuals enabling IWT. In parallel, country-specific UN sanctions regimes have previously been used to target perpetrators of crimes such as human trafficking.

As such, a framework exists to permit a potential targeted sanctions response to IWT. Yet it is unclear what role sanctions should play in the broader counter-IWT toolkit, with no organisation or independent research having yet answered this question.

The Place of Sanctions

On this point, a nuanced understanding is required of the circumstances in which sanctions might usefully be imposed. Here, it is worth considering the record of sanctions use in other areas. Targeted financial sanctions for corruption or cybercrime offences, for example, are commonly applied where the state appears unwilling to address – or appears to endorse – activity by offending entities. In these cases, financial sanctions are favoured given a lack of accountability at state level and limited alternative options to influence behaviour.

In the case of IWT, questions emerge as to when similar circumstances would arise and when sanctions use would add value in a domestic setting. These considerations link to questions around the relative merits of sanctions versus other law-enforcement tools. In the case of IWT specifically, questions arise as to the value of imposing financial sanctions rather than supporting the host government, in other ways, to achieve appropriate criminal justice outcomes.

The FATF, for example, notes that countries can ‘rely on’ sanctions where a ‘conviction is not practically possible (e.g. due to lack of evidence)’. Although this situation may arise where a government is unwilling to bring an offender to justice, it may also occur where a willing government lacks the skills and capacity to bring IWT cases to court.

More broadly, there is consensus that deploying sanctions should not be a goal in itself, and should not replace arrest and prosecution. While sanctions may be useful to signal, constrain and coerce, they should be viewed as a means, rather than an end in themselves.

This is shown in the US experience: as noted by one witness to a 2017 House of Representatives Committee on Foreign Affairs hearing, ‘Kingpin designations are not designed to “take out” anyone, in the sense that they lead to incarceration… [Rather, they are a] tool to reach transnational criminal networks that, for one reason or another, are beyond the reach of traditional law enforcement techniques.’ In this context, in the case of IWT, when sanctions should be privileged over other techniques is not obvious.

What Sanctions Can(not) Achieve

Further, greater awareness is needed on what sanctions can achieve in practice. Misconceptions persist, for example, among parts of the conservation community around what sanctions can do and the asset recovery options available. Far from allowing confiscation and reinvestment or repatriation of assets, as some might assume, most sanctions legislation permits only the freezing of assets, rather than their permanent removal.

In this sense, it is crucial to ensure sanctions do not conflict with law-enforcement activity that provides for longer-term results. In particular, it is essential to assess whether a designation could complicate enforcement action and how potential targets are likely to respond.

Here, it must be considered how far sanctions targeting strategies might contribute to a fragmentation of criminal networks or the development of evasion tactics. Experience in other areas has demonstrated this risk, with increased competition among fragmented criminal networks at times challenging law-enforcement action. Such lessons – as well as considerations of potential wider unintended consequences – must actively shape debates on the merits and drawbacks of financial sanctions in any new arena.

Learning from Experience

In considering an expanded use of sanctions against IWT, all efforts should thus be made to learn from past experience. While the use of sanctions to disrupt IWT is more novel, abundant experience exists in other areas. In the US, over the decades, financial sanctions have become the tool of choice to respond to a range of foreign policy and national security challenges. Many years of experience exist specifically in their use against transnational criminal activity.

The success of this approach has, arguably, been under-analysed. In relation to IWT, the key role of conservation stakeholders outside the traditional foreign policy and national security arena means enthusiasm for this option may not be backed by experience. Instead, the above considerations suggest that sanctions are unlikely to represent a silver bullet.

While this is not to say that financial sanctions cannot play a valuable role, crucial questions remain unanswered. The delay in asking these questions and consulting past experience comes at the risk of repeating mistakes, potentially harming the collective strategic response to IWT.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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