Carbon trading and money laundering

Filed in archive corporate crime on July 18, 2010

In recent months, I have done blog entries looking at how carbon trading desks were becoming targets for organized crime and how it was likely to be a target for massive fraud and Ponzi schemes. None of that is surprising given that carbon trading is built around a market for goods that are difficult, some would say impossible, to measure.

Now we have news reports that organized crime gangs are using carbon trading as a front for money laundering. A meeting of the Asia Pacific Money Laundering Group was told it was happening because the market had little regulation.

The experts aren't saying how exactly it's being done. But clearly, there are loopholes to be exploited. And because governments struggle to understand how the carbon market works, we can expect more organized crime and fraudsters moving in.

Like financial markets, carbon trading will only work when you have rigorous monitoring.