Banks stand to advance the fight against human trafficking and modern slavery by reporting suspicious transactions and other financial activity that raise red flags, according to a report on March 15, 2017. Published by the Royal United Services Institute (RUSI), a renowned British think tank, the report notes that banks and other financial service providers are increasingly applying their transaction monitoring and data analyses to hold those who exploit people for sex and labor accountable.
Today, nearly 46 million people are living as slaves or indentured servants, according to the 2016 Global Slavery Index by rights group Walk Free Foundation. As the trafficking of people is heavily dependent upon the movement of money, the misuse of banks and intermediaries are a key component of keeping the industry afloat. In particular, these institutions not only process payments and serve as the final stop for illicit proceeds, but also act as a conduit for financing the trafficking supply chain itself. For example, money services businesses are exploited to pay transporters, prepaid cards are used to move funds across borders, and individual bank accounts are opened to funnel profits.
Some financial institutions, aware of their misuse, are teaming with regulators and law enforcement alike to seek out ways to stem the tide. In fact, some institutions have looked beyond their standard controls to implement techniques specifically tailored to detect human trafficking. The U.S. Department of Homeland Security’s Project STAMP – created to promote the enforcement of the BSA and the money laundering statutes – aims to shut down human trafficking organizations by identifying and seizing assets and proceeds derived or used in support thereof. Similarly, FinCEN has published guidance to financial institutions that, inter alia, describes a number of unique red flags, such as atypical remittance patterns and frequent payments to online escort services for “advertising.”
As RUSI’s report makes clear, preexisting AML/CFT controls present a potentially highly effective means of identifying and providing evidence to hold accountable those who provide and solicit human trafficking. Given the industry’s heavy dependence on financial institutions, together with these institutions’ preexisting AML/CFT programs and vast amounts of financial data on hand, banks and intermediaries alike are in a unique position to make a meaningful impact.