Following the money of environmental crime: the role of banks in financing illegal rainforest destruction

• In Event: Money laundering from a variety of criminal markets: the role of offenders and of intermediaries

Abstract

Environmental crime generates an estimated $281 billion in annual profits, ranking among the most lucrative criminal sectors globally. While law enforcement focuses on direct perpetrators, the financial networks enabling these offenses remain largely untouched. This paper examines the role of banks in financing deforestation, using the case of JBS, the world’s largest meat producer, which sourced cattle from illegally deforested land in the Amazon. Despite prior fines and regulatory scrutiny, JBS continued receiving substantial loans from European banks, including a $117 million credit from Deutsche Bank, which likely generated at least $40 million in interest profits. This raises the question of whether receiving such interest may constitute money laundering (e.g., under Sec. 261 of the German Criminal Code, “procurement of an object derived from an unlawful act”). The study challenges the notion that financial institutions are neutral intermediaries, proposing that they act as gatekeepers of environmental crime by facilitating capital access. The paper builds on: 1. Recent developments in global anti-money laundering policy: In the last five years, the Financial Action Task Force (FATF) has recognized environmental crime as a major source of illicit financial flows and urged states to designate it as a predicate offense for money laundering. 2. A criminal investigation in France against several banks (e.g., BNP Paribas) following a complaint by environmental organizations alleging money laundering for loans to JBS. 3. Prior criminological research on financial enablers of environmental crime, including work on the World Bank’s role in facilitating environmental destruction (e.g. Rothe & Collins) and the broader “crimes of the powerful” framework (e.g. Friedrichs & Rothe). While existing studies highlight financial institutions’ indirect involvement in environmental harm, they rarely explore their criminal accountability under anti-money laundering laws—an issue this paper seeks to address.

Author

• Lucia M. Sommerer, University of Halle (Germany) & Yale Law School (USA)