By Eric Vandenbroeck and co-workers

The War on Trees: How Illegal Logging Funds Cartels, Terrorists, and Rogue Regimes

In January 2020, the body of a beloved nature guide who had dedicated his life to protecting the monarch butterfly was found dead in a well in Michoacan, Mexico. Days later, the body of a second guide who worked at the same UNESCO World Heritage park in the Sierra Madre mountains was discovered. What these men had in common, according to those who knew them, is that they spoke out against drug cartels engaged in illegal logging in the mountains.

Thousands of miles away, in the Democratic Republic of Congo’s Virunga National Park, another UNESCO World Heritage site, armed rebel groups make $28 million each year by converting trees into charcoal, also known as “black gold.” More than 200 park rangers have lost their lives in the effort to protect natural resources in Virunga from predation.

Around the world, nefarious state and nonstate actors are extracting enormous value from forests to fund their operations. The unlawful clearing of land and the harvest, transport, purchase, and sale of timber and related commodities have long been dismissed as a niche concern of environmental activists. But this is a mistake. Although unsustainable deforestation imperils the environment, illegal logging also poses an outsized - and underacknowledged - geopolitical threat. Environmental crime constitutes a growing economic and national security threat to the United States and countries around the world. Yet Washington has largely ignored illegal logging’s role in its fight against transnational criminal organizations, drug cartels, terrorists, and rogue regimes, as well as China’s part in this illicit trade.

Thankfully, the blueprint for combating transnational crime already exists: enhanced cooperation among governments, increased enforcement, more transparent supply chains, public-private partnerships, and, most importantly, following the money. But until governments treat illegal logging with the seriousness it requires, the world’s worst actors will continue to finance themselves by chopping down trees.

 

Money Grows On Trees

Illegal logging is the third-most lucrative transnational crime, after counterfeiting and narcotics trafficking, according to U.S. Customs and Border Patrol, and is “the most profitable natural resource crime on the planet.” Interpol and the United Nations Environment Program estimate that 15–30 percent of the global timber trade is illegal. In tropical countries in the Amazon, the Congo basin, and across Southeast Asia, the figure is thought to be much higher, reaching 50–90 percent. In the Congo basin rainforest, Congolese government officials have explained that nearly all logging is “in some fashion illegal” according to the New York Times. In 2024, CBP reported that forestry crime generated an estimated $157 billion in profits per year worldwide. It also costs source governments, some of which depend on foreign aid, billions in lost revenue annually.

Today, the revenues generated by illegal logging may be higher: the growth rate of environmental crime, as estimated by the UN Environment Program and Interpol, is five to seven percent annually, or two to three times faster than the global economy. The actual revenue generated in 2025 could be upwards of $250 billion. That these estimates remain so ambiguous is itself a reflection of the extent to which illegal logging has been insufficiently prioritized and studied by international organizations and governments.

Organized illicit actors drive the plunder of large swaths of the forest because it is relatively easy to generate funds and launder the dirty proceeds. Like gold, another natural resource often illegally extracted and traded by criminal groups, wood’s origins and certifications can be falsified, making it possible to pass off illegally sourced timber as legitimate. Through this process of “timber laundering,” criminal actors make illicit wood appear legal by misidentifying the species, mislabeling the origin, or otherwise falsifying trade records, enabling it to be mingled with legal timber, after which it enters international trade and can be sold. Another trick, known as “double laundering,” moves logging revenue into seemingly legitimate investments, such as real estate, to obfuscate its origin. Central American drug traffickers, for example, engage in “narco cattle ranching,” where they establish cattle ranches on land they illegally deforest to facilitate their illicit drug trade and launder their drug proceeds. For such a lucrative activity, the risk of getting caught is relatively low, as environmental crime investigations are not prioritized, and criminal penalties are a fraction of those for other transnational crimes such as drug trafficking.

Legitimate businesses are hurt by these practices. The American Forest & Paper Association found that illegally felled trees decrease world timber prices for licit producers by as much as 16 percent, which “significantly affects the ability of U.S. producers to export.” Businesses that rely on the timber industry, meanwhile, face legal, operational, and reputational risks when illegal timber makes its way into supply chains. The Environmental Investigation Agency reported in 2023 that Home Depot purchased from an importer more than 1.2 million doors that were manufactured with illegally sourced wood from Equatorial Guinea and misidentified as coming from the Republic of Congo, in apparent violation of the U.S. Lacey Act. (The Act prohibits the import of illegally harvested timber and related products and requires importers to accurately declare the origin of imported wood). Ikea faced similar scrutiny a few years prior, when UK environmental watchdog Earthsight accused the Swedish company of using illegally logged wood from Ukraine to make chairs. Both companies had reason to worry about their opaque supply chains: in 2016, the U.S. Department of Justice fined Lumber Liquidators more than $13 million for purchasing hardwoods made in China that were manufactured mostly from illegally sourced Russian wood, at the time the largest fine ever for violating the Lacey Act. Banks that provide financing to businesses relying on wood sourced from tropical locations or working with clients with an established pattern of activity related to illegal deforestation also face risks.

 

Wooden Weapons

Illegal logging is often intertwined with international conflict. Following Russia’s invasion of Ukraine in 2022, the EU quickly banned Russian and Belarusian wood products so that Moscow could not underwrite its war effort with funds from the international logging trade, which generated nearly $14 billion for Russia in 2021 alone. The United Kingdom followed suit with bans of its own, and the United States imposed various sanctions, including on the Kremlin-linked Wagner paramilitary company, which secured a 30-year timber concession in the Central African Republic with an estimated value of 2 million euros per year. As U.S. Customs and Border Protection put it, the “illegal timber trade is soaked with blood.”

Indeed, sanctioned cartels and terrorist groups have repeatedly turned to forests as a source of funding. Mexican cartels, for instance, use illegally logged timber to finance trade with Chinese manufacturers of fentanyl precursors in a natural resources trade–based money laundering scheme. Ex-guerrilla groups in Colombia razed swaths of the Amazon rainforest to support illicit operations. To fund insurgencies, the Islamic State (also known as ISIS) in Mozambique engaged in illegal logging, and Somali terrorist group al-Shabab cut down acacia trees for charcoal, a trade the U.S. Treasury estimated was worth as much as $20 million a year in sales and taxes. In Mali, al-Qaeda affiliate Jamaat Nusrat al-Islam capitalized on the illegal trade of endangered rosewood by controlling access to the forests.

The U.S. government has been aware of this for years. In 2021, the U.S. Department of the Treasury described timber as a “significant” source of funding for the Myanmar military junta and sanctioned MTE, Myanmar’s state-owned timber company. Following a UN Security Council resolution in 2003 banning the import of round logs and timber products from Liberia, then ruled by President Charles Taylor, President George W. Bush issued an executive order acknowledging that the illicit trade was linked to arms trafficking and perpetuating conflicts in Liberia and “throughout West Africa.” And in 2012, a similar ban was issued on Somali charcoal.

These actions by the United States are, of course, welcome, but they are insufficient and demonstrate that illegal logging is most often thought of as a byproduct of another illicit activity. Until the exploitation of forests (and other natural resources) is seen as a national security threat in and of itself, illegal logging and the crimes that often accompany it will continue to weaken legitimate governments, prop up despots, and destabilize regions.

 

Rosewood Mania

The rosewood trade in China provides a clear example of how the illegal timber trade can balloon in pernicious and destabilizing ways. Rosewood is closely associated with the glory of Chinese dynasties in the sixteenth to eighteenth centuries, and demand for rosewood luxury products has grown as the country has become wealthier. Chinese traders initially looked abroad for supply, to Asian neighbors such as Cambodia, Laos, Malaysia, Myanmar, and Vietnam, but eventually, once those reserves became harder to access, they turned to Africa.

Commercial Chinese logging companies have moved into multiple countries in Africa, collecting forest concessions like property in a game of Monopoly. In an increasingly familiar pattern, Chinese traders, banned from commercial logging in domestic natural forests, exploit governments with the weakest legislation, most limited enforcement capabilities, and highest susceptibility to corruption. According to a forestry official in Mozambique, where a 2017 logging moratorium failed for lack of enforcement capacity, the country’s logging industry “is dominated by Chinese people who go to the bush and convince the poorest people to cut the logs.” As of 2016, the rosewood trade was an estimated $26 billion industry in China, with 80 percent of the country’s supply coming from West Africa. With this bonanza has come unfortunate but predictable consequences: for the last 20 years, rosewood has held the dubious distinction of being the most trafficked natural product in the world.

In 2022, the Convention on International Trade in Endangered Species of Wild Fauna and Flora instituted an all-out ban on rosewood exports from 16 African countries. The effort did decrease rosewood exports to China from Africa, but illicit Chinese traders have found workarounds, identifying a substitute species of wood and restarting the cycle of exploitation. Although the Chinese government has largely denied involvement with illicit Chinese traders, it nonetheless has made Africa’s anti-illegal logging enforcement more difficult by engaging primarily in opaque bilateral diplomacy and shunning cooperative efforts to curb illegal logging. Beijing has also failed to take effective and comprehensive action against illicit actors abroad and on illegal timber at its borders. Without a concerted effort by China to stop the trade, demand (and gaps in enforcement) will ensure that it continues.

China’s approach to the world’s forests and its hunger for natural resources more generally is not without consequence for the United States. China is the largest global exporter of timber products. Yet because domestic logging in China’s forests is heavily restricted, the country’s construction and manufacturing industries source their wood from a variety of countries, including Russia and several countries in Asia and Africa. According to the Environmental Investigation Agency, China is “probably the world’s largest importer of illegal timber.” The United States, meanwhile, is the largest single foreign market for Chinese timber; in 2023 alone, China exported $2.93 billion worth of timber to the United States, according to UN data. Washington should care where that timber is coming from and what it is financing.

 

Cut It Down

As natural resources are depleted, competition over the limited forests that remain will intensify, the value of logs will increase, and the proceeds will continue to perpetuate conflicts and enrich bad actors. Yet the United States and many other source and destination countries for illegal timber do not consider illegal logging and environmental crime priorities. Environmental crime enforcement is underfunded in most countries, and comparatively little is understood about its associated illicit financial flows, even though a good portion of the proceeds end up in the international financial system.

Governments should recognize illegal logging as a priority threat and formally include it in law enforcement and anti-money-laundering, and countering the financing of terrorism priorities. They should also significantly increase law enforcement and prosecution efforts and conduct risk assessment studies alongside financial institutions to identify vulnerabilities and respond to risks. If governments treat illegal logging as a priority, financial institutions will do the same, enhancing due diligence for trade involving high-risk jurisdictions, filing more suspicious activity reports, and increasing scrutiny for clients engaged in the logging industry and associated trade. Legislatures should pass laws curbing trade in illegal timber and related commodities; significantly increase punishments and law enforcement resources; guarantee that illegal logging of all species, not just those recognized as endangered, is criminalized; and ensure that illegal logging is a predicate offense for money laundering.

Governments cannot undertake this effort alone, however. Law enforcement and financial intelligence units should share intelligence among one another and, when possible, with non-governmental organizations, private entities - including shippers, the timber industry, and big retailers - and the public, either directly or through public-private partnerships. Because illegal logging crosses many borders, governments should coordinate to share intelligence internationally to better facilitate prosecutions and asset seizures.

Finally, in the last several decades, governments have used thematic sanctions to tackle the biggest national security threats they face. The United States, sometimes alongside Canada, the UK, and the EU, has established sanctions programs for narcotics traffickers, terrorists, proliferators of weapons of mass destruction, cybercriminals, serious human rights violators, and corrupt actors. A thematic sanctions program focused on illicit natural resource trafficking aimed at preserving limited natural resources and securing their sustainable and equitable use would elevate awareness of the threat, disrupt international networks, and deter would-be illicit actors. The tools developed in the fight against other transnational threats should be used to safeguard the world’s forests against exploitation. Otherwise, illicit actors will continue to profit from their pillage.

 

 

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