New study raise awareness of the current vulnerabilities of the emerging carbon markets
INTERPOL has recenlty published a guide to Carbon Trading Crime to provide an initial overview of carbon trading crime and to raise awareness of the current vulnerabilities of the emerging carbon markets.
The INTERPOL Guide to Carbon Trading Crime examines the areas within the industry which have the potential to be manipulated by criminals, through securities fraud, insider trading, embezzlement, money laundering and cybercrime. It also assesses the current vulnerabilities of the carbon market and provides information to support national authorities in establishing adequate policing measures.
INTERPOL recognises that these carbon markets are at particular risk of exploitation and require sufficient monitoring and robust legal enforcement to tackle the potential for environmental and financial crime.
To address these concerns, INTERPOL recommends enhanced efforts to:
(i) raise awareness amongst law enforcement, including an investigative workshop bringing together regulators and experts to undertake strategic analysis of the existing and emerging carbon markets to identify the risk of criminal exploitation;
(ii) build and strengthen the capacity of government institutions responsible for regulating and policing the carbon markets;
(iii) engage the law enforcement and regulatory community in the design of carbon trading platforms, and advise on necessary law reforms to avoid loopholes and ensure that carbon trading regulations are consistent between different jurisdictions, practical and enforceable;
(iv) improve coordination and communication channels between law enforcement from different countries to share information on the trades in carbon credits;
(v) improve internet security of the carbon trading exchanges to prevent computer hacking;
(vi) improve transparency in the financial transactions conducted on carbon trading exchanges; and
(i) establish clear guidelines on determining additionality, and procedures to ensure the measurement process, methodologies and calculations of emissions reductions are conducted transparently and are easily verifiable, including use of indicators or types of data that are difficult to manipulate, clearly defined and easy to verify objectively.
For more information, please click at INTERPOL – Guide to Carbon Trading Crime
Above infographic depicts the VAT fraud linked to the Carbon Emissions Trading System (Image Credit: Europol)
An initiative of the INTERPOL Pollution Crime Working Group, the INTERPOL carbon trading guide was produced with contributions from partners including Environment Canada, the Norwegian Agency for Development Cooperation, the Netherlands Government and the US Environmental Protection Agency.
The guide includes several case studies from around the world where greenhouse gas accounting firms, national authorities operating in under-regulated jurisdictions, and individuals or companies claiming to offset emissions in return for investment have cut corners, falsified information or received bribes.
