A Key to Ending Deforestation Lies in Financial Transparency
By: Matti Kohonen, Executive Director at Financial Transparency Coalition
If we want to stop deforestation and not just slow it down, we must go beyond voluntary pledges, carbon offsets, and tree-planting schemes.
We need to follow the money.
This means identifying not only the chainsaws on the ground, but the landowners, commodity producers, financiers, and corporate beneficiaries who profit from clearing forests and laundering the proceeds through opaque financial systems.
Forests and other land-based ecosystems play a vital role in mitigating climate change, absorbing roughly one-third of human caused CO₂ emissions every year. Yet they are under siege from a wide array of environmental crimes from illegal logging and mining to deforestation that are tied to commodity agriculture like soy, beef, palm oil, and cocoa. These are not isolated acts of criminality. They are often highly organized, transnational operations embedded in legal loopholes and facilitated by financial secrecy.
As proposed in the Consenso de Sevilla, the outcome of the 4th Financing for Development conference ending today, which calls for reforms to the global financial system, among other things, governments could finally require transparency on who really owns what.
For individual governments, this means mapping and putting on public record companies' beneficial owners - the real persons who own and control companies - down to individual land plots, cross-referenced with crop data, satellite data on logging, sanctions lists, and property records.
These commitments should be supported by various United Nations (UN) bodies and upcoming negotiations, including under mandates of the UN Office on Drugs and Crime and Conference on Trade and Development to monitor illicit financial flows, and the UN Tax Convention negotiations where financial transparency will be a key issue.
By exposing the real actors and corporate legal structures behind both problems, illegal logging and the deforestation linked commodities we can hold them accountable—not just through environmental laws, but through financial enforcement using money laundering and tax investigations as accountability tools.
Why Trees Are Falling?
The destruction of forests and ecosystems around the world is not random — it’s driven by systemic forces. Key drivers include:
Weak law enforcement, which enables illegal logging and land grabs.
Global supply chains that reward deforestation and unsustainable resource extraction.
Overconsumption in wealthy nations, fueling expansion into ecologically sensitive areas to meet rising demand.
Insecure land tenure, leaving local communities vulnerable to displacement and exploitation.
Financial secrecy, which obscures the true beneficiaries of environmentally destructive practices.
While global climate finance programs like REDD++ focus on reforestation and carbon credits, they fail to address the financial drivers of deforestation. These systems do little to remove the vast incentives for illegal land clearing or to penalize the actors who benefit.
As a result, the root problem remains: It is still profitable to destroy forests, and often low risk for those at the top of the chain.
The $157 Billion Black Hole
Illegal logging and forest clearance generate an estimated $157 billion in illicit financial flows annually. According to the UN Environment Program and INTERPOL, up to 30% of all timber is illicitly logged.
So where do these profits go?
Often, they are moved through the global financial system largely undetected, thanks to anonymous shell companies, legal gaps, and jurisdictional fragmentation.
A powerful example comes from Peru, where illegal logging groups have used Nevada-based shell companies, a jurisdiction historically known for lax corporate ownership disclosure laws, to funnel illicit profits overseas and avoid detection, according to the FACT Coalition.
Many companies are deliberately structured to hide their true owners, exploiting legal loopholes that allow them to stay legally anonymous. One of the most common tactics used by criminals and corrupt actors is the so-called “25% threshold” — a rule that only requires individuals to disclose their ownership if they hold 25% or more of a company. By staying just below this threshold, bad actors can avoid scrutiny, while still exerting real influence and benefiting from the company’s activities in the shadows.
And it is not just forestry. The fishing industry offers a cautionary tale.
What Illegal Fishing Can Teach Us
The Financial Transparency Coalition (FTC) found that just 16.7% of nearly 1,000 vessels linked to illegal, unreported, and unregulated (IUU) fishing could be traced to a real human owner. In most countries, like Argentina for example, fishing vessels are required to register with national authorities, but there is no obligation to disclose ultimate beneficial owners. This is a massive blind spot that allows operators to continue profiting from criminal activity with impunity.
This same veil of secrecy exists in forestry. Without full visibility into who owns which plots of land, grows which crops, or controls which companies, it is virtually impossible to trace deforestation-risk commodities back to specific land plots or individuals.
The Limits of Corporate Due Diligence
Today’s supply chain databases rarely go beyond municipal boundaries leaving entire layers of the supply chain obscured.
We need real accountability:
Transparent land and crop registries: These must be public, detailed, and able to track what is grown, where, and by whom, especially in recently deforested areas. Cross-referencing this data with ownership and sanctions lists can expose illegal activity and supply chain abuses.
A global, centralized registry of beneficial ownership: This registry should be publicly accessible and linked to datasets on environmental crimes and sanctions. Journalists and civil society need access to this information to hold powerful actors to account.
Mandatory disclosure across the entire supply chain: From source to transit to destination countries, all have a role to play. Beneficial ownership thresholds should be lowered—or eliminated entirely—in high-risk sectors like forestry and fisheries. Transparency must cover the full chain: from field to port to boardroom.
Only with these tools can we dismantle the networks enabling illicit deforestation—and redirect climate finance where it truly matters.
Make Climate Crimes Financial Crimes
We’ve already seen this work.
After the FTC identified a Chinese distant-water fishing company as a major global offender in IUU fishing, the United States froze its assets and delisted it from the Nasdaq.
This shows what is possible when environmental and financial enforcement are aligned.
In fact, the FTC has so far uncovered the top ten companies linked with IUU fishing that are funneling illicit profits to their shareholders, most often based in China, Colombia, and Spain.
Imagine that same power applied to illegal deforesters.
Global anti-money laundering tools can be powerful weapons against environmental crime. They allow us to:
Seize illicit profits tied to illegal deforestation, fishing, and other forms of environmental destruction
Launch cross-border investigations that follow the money across jurisdictions
Expose and hold accountable the true decision-makers and hidden beneficiaries who profit from these crimes
What Needs to Happen Next
To seriously protect the world’s forests, we need more than pledges. We need bold, systemic action:
Strong supply chain laws in both producer and consumer countries for holding companies and their beneficial owners accountable from source to shelf.
Public beneficial ownership registries that are linked to environmental data, exposing who profits from deforestation and ecosystem destruction.
A global asset registry to track ownership of land, crops, vessels, and companies to complement tools like public country-by-country reporting and the automatic exchange of financial data between tax authorities.
Recognition of environmental crimes as financial crimes, unlocking powerful tools for prosecution, asset seizure, and international cooperation.
This is more than saving trees. It is also about shifting the balance of power.
The destruction of our forests is not only an environmental issue, but also a financial crime that is often orchestrated by people in suits, not just chainsaws in the jungle.
It is time to pull back the curtain—and follow the money, all the way to the top.