Illegal Mining Fuels Global Deforestation and Crime

Illegal mining is escalating, ranking as the fourth-largest cause of deforestation worldwide. Over the past five years, more than 35 percent of mining-related deforestation has occurred. This activity also leads to severe environmental pollution, with mercury and cyanide contaminating rivers and endangering public health.

Financially, illegal mining generates billions of dollars annually in illicit profits and serves as a crucial funding source for terrorist groups. In Peru, for instance, illegal gold mining proceeds nearly tripled between 2024 and 2025, reaching US$12 billion. While initial transactions may use cash or cryptocurrency, exported minerals often pass through formal companies and the financial sector, posing challenges for institutions.

Globally, nearly 84% of mining-related deforestation is concentrated in just 10 countries. Financial institutions face difficulties assessing risks in complex, opaque supply chains originating from remote locations. A report indicates over 80 percent of financial institutions have exposure to illegal mining risks, yet 40 percent are not addressing it.

Recognizing illegal mining as a distinct financial crime risk and embedding it into AML frameworks is crucial. Enhanced due diligence on clients and transactions in high-risk sectors and jurisdictions is necessary. This requires specialized tools to verify supply chain legality, especially with potential falsified documents or informal operations. Strengthening transaction monitoring and collaborating with stakeholders, including governments, is also vital.

Governments play a key role in providing clearer guidance. Current U.S. and UK guidance on illegal mining is limited, leaving financial institutions exposed without specific typologies or risk assessments. The Financial Action Task Force's information is also outdated. This lack of clear direction allows illegal mining proceeds to move more freely through the financial system, weakening efforts for both financial integrity and environmental protection.

The upcoming June 2026 Illicit Finance Summit presents a critical opportunity for governments to prioritize stronger regulatory guidance on illegal mining. This action is essential for safeguarding financial integrity and protecting the planet.