**How Financial Institutions Can Disrupt Environmental Crime to Protect People and the Planet**

There are numerous steps that can be taken locally, regionally, and internationally to combat climate change, reduce pollution, and ensure a safe, clean planet for future generations. For corporations, especially financial institutions, the challenge lies in identifying the most effective approach to making a difference. A crucial part of this is acknowledging and addressing their own role in the chain of environmental crime.

In today’s information-rich age, the lack of awareness or avoidance of environmental issues is often criticized. Yet, the abundance of information can overwhelm companies, making it difficult to provide quick answers while keeping pace with economic demands and client needs. Striking the right balance is essential.

### The Issues and Risks

Practices like illegal mining and logging cause significant environmental damage, harm people and economies, and devastate ecosystems. However, these harmful practices would struggle to persist if ethical business practices were easier and more rewarding than the status quo. Financial institutions have a critical role in this equation.

Gold, for example, is often mined in regions like Latin America and Africa and exported to the US, Europe, and the Middle East. Companies acquiring the gold must use the international financial system to pay for these goods. The challenge arises when these companies and their banks conduct due diligence.

Are the right questions being asked?

Typically, due diligence focuses on ensuring payments aren’t linked to terrorist organizations, sanctioned entities, or illegal activities. Recent years have seen increased emphasis on combating corruption and tax evasion, with regulators imposing heavy penalties on banks that fail to meet these standards.

### Embracing the ESG Agenda

Today, the ESG (Environmental, Social, and Governance) agenda is a top priority for governments, corporations, and regulators. Financial institutions must adapt and react to this shift.

Under the ESG framework, companies must assess the impact of their operations and the integrity of their supply chains. They need to trace their products to ethical and sustainable sources. In the gold mining industry, this means ensuring their product isn’t sourced illegally and that they aren’t inadvertently financing environmental crimes.

### The Role of Banks

Banks must go beyond traditional due diligence for import/export transactions. Certain industries are inherently riskier, and banks need to ask deeper questions about the practices, people, and organizations involved in their value chains.

It’s crucial to ask the right questions to uncover risks and ensure commodities aren’t sourced illegally. This isn’t always straightforward. At Mehasa Consulting, we know which questions to ask and where to direct them. We can guide your organization in taking the necessary steps for positive change.

### Scaling Up Efforts

Identifying every potentially damaging transaction can seem daunting, but a risk-based approach can make the process more manageable. Initial steps include identifying high-risk activities, markets, and clients. By asking the right questions at the right time, exposure to risk can be minimized.

In regions like Latin America, where many companies are exposed to the mining industry, strategic forensic work can detect whether a banking client is involved in unethical transactions. Our regional expertise and knowledge of local laws at Mehasa Consulting can help navigate these challenges.

### Fostering Cultural Change

Top-down commitment to environmental responsibility should permeate the entire business culture. Banks can leverage their influence to promote ethical behavior.

Raising awareness of the potential consequences of certain practices can drive change. We work with C-suite executives to help them understand not only the importance of environmental stewardship but also how to lead their teams in making positive changes.

### Future Strategies

Technology plays an increasingly important role in helping banks address environmental crime. Artificial intelligence (AI) can be a valuable investment for performing due diligence at scale. Combined with the expertise of Mehasa Consulting, AI can detect unlawful financing by analyzing profiles and tracking suspicious transactions.

By embracing these strategies, financial institutions can significantly contribute to breaking the chain of environmental crime, ensuring a safer and cleaner planet for future generations.