Illegal timber trade from Brazil and the need for robust due diligence

At the 12th BRICS Summit, held via video conference on the 17th November 2020, the Brazilian government “threatened to disclose” that “Europeans have purchased illegal timber from Brazil during 2017”.

Indeed, this is true.

Recent analysis by BVRio concluded that a high percentage of Brazilian hardwoods, exported to EU member states and the USA in 2016-2017, had a very high risk of illegality. The study was based on BVRio’s Timber Due Diligence systems, that uses big data analysis and satellite imagery and is able to identify the risk of irregularities in 99% of cases.

How could this illegal trade happen unnoticed?

Were European timber traders purposefully buying and importing illegal Brazilian timber?  Probably not.  International traders, especially from the US or the EU, are expected to conduct due diligence and ascertain the legality of the timber products that they import into these markets, and are subject to hefty fines and/or imprisonment if found to be flouting them. For this reason, traders insist that all timber consignments are accompanied by the official documentation related to the products acquired.  In fact, all timber exported from Brazil have accompanying official documentation from the Brazilian authorities, even when the timber come from illegal sources.

In this case, are the Brazilian authorities negligent, and complicitous with such trade?  Not necessarily.  The systems used by government agencies are not robust enough to detect many types of fraud, especially if government agencies do not complement their desk approvals with the necessary field inspections. With reducing budgets and dismantled enforcement capacity, Brazilian environmental agencies are less and less able to control illegal practices in this sector, which include theft of wood from conservation areas and indigenous reserves, the use of slave labour, and other illegal practices. The result is that over 90% of timber produced in Brazil has some sort of illegality.

The EU is very aware of these problems. In September 2019, the Expert Group for the European Union Timber Regulation (EUTR) concluded that imports of species harvested in natural forests in the Brazilian Amazon Basin should generally be considered to have a non-negligible risk of illegality and released specific additional due diligence requirements for timber imports from Brazil.

So, how to avoid being exposed to illegal timber?

This recent squabble is not an isolated case. Over the last 15 years, international efforts have intensified to combat illegality in the timber sector. The US Lacey Act 2008, the EUTR, and amendments to Australia’s Illegal Logging Prohibition Act have made trading illegal timber a punishable offense. In parallel, initiatives such as the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) and Forest Trend’s Timber Regulation Enforcement Exchange (TREE) have helped to increase capacity to implement these laws. Enforcement agencies like Interpol and FBI have departments dedicated to investigating and prosecuting illegal timber trading.

At the same time, the increased awareness of the potential for illegality has resulted in a reduction in demand for tropical timber, in particular from the Amazon region. Gradually, American and European companies are refraining from buying Brazilian tropical timber and replacing it with supplies from elsewhere.

For the timber industry in the Amazon and elsewhere to recover and resume growth, it needs to undergo a process of renewal and transformation, through the adoption of new trends, market practices and sustainability standards. The first step in this process is to ensure legality in the industry. This, in turn, would require the development and adoption of monitoring, control and traceability systems for the production, processing and transportation of Brazilian tropical wood products.

Annex:  BVRio Due Diligence and Risk Assessment tools

The big data methodology described in the report forms the basis of BVRio’s to innovative Due Diligence and Risk Assessment system (, an online tool to assist traders and buyers of tropical timber from Brazil in verifying the legality status of the products purchased, especially those that need to ensure compliance with the EUTR and the US Lacey Act. Using large databases and satellite imagery, the system is able to track environmental infractions, slave labour, illegal deforestation and tax non-compliance. It is updated on a daily basis, conducting over 2 billion data cross checks, and performs over 150 analysis per individual timber consignment. All findings are stored using modern block-chain technology (see video The report showed that BVRio’s System was able to identify the risk of irregularities in 99% of cases analysed.

The objective of BVRio’s Dues Diligence & Risk Assessment System is to facilitate the procurement of responsible timber products from Brazil in an efficient, cost effective and secure way, increasing liquidity, supply and demand for this market segment and helping to promote transparency, legality and sustainability in the timber sector.

BVRio has been promoting the use of its system since its initial development.  The technology exists and it has proven success. Its use would reduce the risks to timber importers, importing nations, and could assist Brazilian authorities improve its own systems. Ignoring existing tools and technologies have only perpetuated the illegal trade of timber, which in turn will result in a reduction in trade activities, with negative impact on the sector as a whole and all the operators that conduct sustainable forest management.

Therefore, we recommend that:

  1. Traders and custom authorities in importing countries can use the system to screen each individual consignment that they buy, so to ensure that these are not from illegal sources.  In fact, the EU TR requires buyers to conduct a due diligence of the products they import, and BVRio’s system can provide them with information on every individual timber lot.
  2. Customs authorities or the EU Trade Regulation Competent Authorities can utilise these tools for spot checks and insist that the traders in their countries use the tools routinely.
  3. Brazilian agencies could use the system to check on the timber suppliers that are defrauding their control systems and use it to cut loopholes and weaknesses that allow such operators to routinely defraud their system.

BVRio’s Due Diligence and Risk Assessment System is available as a desktop version (visit or as apps in Android or IOS format, available for free download at the Google Play and Mac App Stores.

Since its release in 2015, BVRio’s system has been used by custom officials, environmental agencies, traders, and companies to assess more than 10,000 individual timber consignments.

Newspaper clip:;

2 BVRio 2016: ibid.