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One of the most ambitious ecological projects of the European Union - the emissions trading system (EU-ETS) - is about to become a Trojan horse used by the world of organized crime, claim the journalists from Follow The Money (FTM), following an investigation carried out in the Netherlands, Belgium and Germany.
Created on the polluter pays principle and intended to encourage green investments, it seems that the European mechanism has been exposed as vulnerable to an increasingly difficult-to-control scourge: money laundering, says the cited source.
The journalists from FTM show that two recent studies carried out by the German Federal Environment Agency (UBA) have revealed what many European officials refuse to acknowledge: the system that is supposed to lead us towards a sustainable future can easily be used by criminal networks that deal with money laundering, without the authorities realizing it.
How does it work? Simple. Companies receive CO2 emission rights from Brussels. If they exceed their allocated quota, they are forced to buy more carbon certificates, in a market where prices are set to rise as the European Union gradually reduces the total amount of emissions allowed. So far, everything seems fine. But it is precisely this regulated and seemingly "green" structure that is becoming fertile ground for criminals.
Dutch magistrate Dick Crijns, an expert in financial crimes, told the cited source: "A money launderer is always looking for instruments that do not raise suspicions. And who would suspect a government-approved mechanism that promotes sustainability?"
He told Follow The Money that criminals can invest money from illegal sources in the purchase of emission certificates, then transfer them from one country to another, with almost impossible traces to detect. Especially since the system seems to be tailored to mafia networks: traded volumes are recorded, but prices are not, which makes it extremely difficult to detect suspicious activities. Authorities in Germany and the Netherlands warn that this opacity constitutes a major vulnerability. In response, a European Commission spokesperson claimed to the cited source that banks and exchanges are already obliged to report prices when requested, and including this information directly in the register would add an unnecessary bureaucratic layer.
But the risks are real and considerable. Research coordinated by Kai Bussmann, a professor of criminology, identified over 3,000 indicators of possible money laundering operations in the European emissions trading system. These include non-transparent ownership structures and unusual or difficult-to-trace payment methods.
"The risks are massively underestimated by companies, financial intermediaries and even institutions involved in the European emissions system," he told Follow The Money.
In other words, a mechanism designed to combat pollution and support sustainable development risks becoming, in the absence of clear supervision and control measures, a launching pad for illegal financial flows. In this context, European authorities should rethink the way the system is managed and implement reforms that protect it from abuse, without compromising its ecological purpose.
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