Potential Alliance between FinCEN and the Department of Justice’s Environmental Crimes Unit Presents a Powerful Law Enforcement Combination for Businesses to Watch | Eversheds Sutherland (United States) LLP

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As companies continue to focus on improving their ESG benchmarks, they are constantly evaluating their environmental management systems and compliance programs for potential areas of ESG risk. The reason is simple: these internal programs provide the organization with the tools it needs to assess compliance with environmental laws and regulations. Recognizing the significant exposure that non-compliance can incur, these systems are used to alert the business in advance of instances in which the business could break the law. Traditionally, such non-compliance would be investigated at the federal level by the Environmental and Natural Resources Division of the United States Department of Justice or, in more serious cases, the Environmental Crimes Section. The Environmental Crimes Section has been a particularly robust enforcement agency, collecting more than $ 4 billion in criminal fines over the past 25 years for crimes that cause damage to “the world’s ecological and wildlife resources.” nation ”. Existing environmental management systems have been developed to reflect the priorities of these agencies.

However, a new concern on the horizon, which may escape detection by traditional environmental management systems, is FinCEN’s new focus on environmental crimes. The involvement of other federal agencies in coordination with FinCEN’s new focus on environmental crimes raises the stakes even higher. The Environmental Crimes Section is known to be aggressive in its prosecution of environmental crimes, especially since federal environmental criminal laws often impose strict liability on perpetrators. A FinCEN / DOJ alliance on environmental crimes would be a remarkably powerful law enforcement combination. FinCEN has long been the United States’ financial watchdog for criminal financial activity, monitoring money laundering, terrorist financing, and the sharing of financial intelligence between government agencies. A recent FinCEN exchange indicates that FinCEN is looking to expand outside of its traditional mission to focus on financial activities related to “environmental crimes”. FinCEN hosted an event focused on “Identifying and Addressing Illicit Financial Flows Associated with Environmental Crimes”. Included in the event were other federal agencies. The scope of the “environmental crimes” discussed covered a wide range, covering any illegal conduct that harms “human health”, “nature and natural resources” and causes “the overexploitation of natural resources, thereby increasing levels of dioxide. carbon in the atmosphere. ”This is a notable extension of FinCEN’s stated mission, which is generally limited to money laundering and financial activities. A FinCEN / DOJ alliance on environmental crimes would be a remarkably powerful law enforcement combination.

As companies step up their ESG efforts, this is an emerging development that may be worth reporting for companies that have exposure in these areas. This is a new vector of accountability encompassing both financial transactions and environmental activities that existing compliance systems may not be equipped to handle. Caution requires organizations to assess their environmental compliance systems in light of these developments.

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