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5 maltatoday | WEDNESDAY • 30 JUNE 2021 NEWS KURT SANSONE ILLICIT waste disposal and the 'dirty' money it generates are the next frontier for law enforce- ment agencies battling global financial crime. Waste trafficking is one of the environmental crimes with a money laundering dimension listed in a report released last week by the Financial Action Task Force. The other two are illegal forestry and mining. According to the interna- tional agency, illicit waste traf- ficking generates anywhere between €8 to €10 billion in criminal gains every year. "Anti-money laundering is of- ten not part of the public pol- icy dialogue on environmental protection. Despite the signifi- cant proceeds involved in many cases, jurisdictions are most- ly addressing environmental crime as a conservation issue rather than a serious financial crime," FATF said. The research suggests that fi- nancial flows from waste traf- ficking may be transnational, regional or even domestic. The transnational aspect normally involves the illegal export of containers filled with hazard- ous, non-compliant waste, or waste that is misclassified as recycled materials. Shipments are often directed to developing or middle-in- come countries but in some instances the waste may never leave the country and is dis- posed of illegally on land and at sea, or simply stored illegally. FATF said that criminal syn- dicates play "a significant role" in waste trafficking in many ad- vanced economies. "This includes organized crime groups owning or op- erating legitimate front com- panies in waste management, but which do not operate as stated. Instead, they often use sub-standard disposal or stor- age processes. These compa- nies may engage in fraud to secure contracts for waste dis- posal and then illegally dump- ing, resulting in illicit proceeds – while also costing the gov- ernment millions in clean-up costs," the report said. And like other crimes exam- ined in the FATF study, pro- ceeds from waste trafficking are often comingled with gains from legal waste trade. Disrupting these illicit mon- ey flows presents unique chal- lenges because unlike extracted materials from forestry or min- ing, waste has negative value. "This liability provides busi- nesses with an incentive to dis- pose of its waste as cheaply and easily as possible, whether legal or illegal. This provides crimi- nal groups with many potential customers and opportunities," the report said. FATF noted that the prob- lematic nature of dealing with waste also provides little moti- vation for jurisdictions to tack- le illegal activity. "Some companies bearing a legitimate permit for han- dling waste may import much larger amounts of waste than their permit allows and either export it or simply dispose of it," FATF said, adding that this method was the most common in Europe, due to the lack of in- ternal border controls. Illegal methods of waste dis- posal as a cost saving measure serve to increase the company's profit margins. Despite the unique challenges posed by the waste sector, the FATF called on member states to "investigate and prosecute for money laundering and re- lated offences". In a case study from Italy, a transnational criminal group was dismantled and people prosecuted for illicit waste trafficking, tax crimes, mon- ey laundering and self-money laundering. False invoices discovered by the Italian law-enforcement agencies amounted to €57 mil- lion with proceeds of crime laundered by simulating false trade transactions with other countries. Another laundering technique used was to simulate sports sponsorship. Waste disposal and dirty money: the next money laundering frontier Letter of Intention ǡ ǡ ʹ͵ ǡͳͻͻͲȋ ͳͻͻͲȌǤ ǣ ͳȌ Ǣ ʹȌ ǡ Ǣ ͵Ȍ Ǣ ͶȌ Ǣ ͷȌ Ǣ Ȍ Ǥ ǣͺǡǡ Ǧǡ͵ǡǡ ǡ͵ͲͳͲǡǤ