By Terri LuttrellHuman trafficking is the crime of stealing a person’s freedom for profit, and it continues to be a widespread global problem. According to the U.S. Department of Homeland Security, traffickers might use violence, fraud, manipulation, or false promises of well-paying jobs or romantic relationships to lure victims into some type of labor or commercial sexual act. The International Labor Organization estimates that there are currently 25 million victims of human trafficking around the world.
Profits from human trafficking are estimated globally at $150 billion a year and are flowing through the U.S. financial system. As the non-profit anti-trafficking organization Polaris reports, “While there are certainly some completely unbanked traffickers, a significant portion of that overwhelming sum passes through legitimate financial services businesses.”
January is Human Trafficking Awareness Month, and the good news is that the financial industry and especially anti-money laundering professionals, can help stop these criminals with:
- Enhanced awareness and training
- Knowledge of typologies and red flags
- Strong relationships with law enforcement
What is human trafficking?
Understanding and detecting human trafficking starts with dispelling some of the common myths and misconceptions surrounding this form of modern slavery, the fastest-growing criminal activity in the world. The U.S. Department of Homeland Security outlines the following six myths:
- Human trafficking doesn’t occur in the United States. It only happens in other countries. As recently as June, a construction contractor in Northern California was sentenced to eight years in prison after a jury convicted him of obtaining forced labor in a case investigated by the Department of Homeland Security’s Human Trafficking Unit. Evidence at trial showed the contractor had kept 13 undocumented workers he recruited from Mexico in squalid living conditions while making them work as long as 24 consecutive hours, according to prosecutors. He was also ordered to pay nearly $1 million in restitution for unpaid wages.
- Human trafficking victims are only foreign-born individuals and those who are poor. Actually, the U.S. Department of State noted its 2019 Trafficking in Persons Report that a number of international organizations have estimated that human traffickers exploit a majority of their victims without moving them from one country to another.
- Human trafficking is only sex trafficking. Human trafficking involves the use of force, fraud, or coercion to exploit someone. It does not have to involve sexual acts. Forced labor is the second most common type of human trafficking, and this can occur in factories, on farms, in construction, in private homes, and other places.
- In order to be considered a victim of human trafficking, individuals must be forced into commercial sex acts. In addition to the other types of human trafficking such as forced labor and debt servitude, any commercial sex act by a minor is human trafficking even without force, fraud, or coercion.
- Human trafficking is the same thing as human smuggling. Human smuggling is a transportation-based crime that requires an illegal border crossing, usually by someone voluntarily being smuggled. Human trafficking does not require a border crossing and is a crime against an involuntary victim. These are not interchangeable terms, although human smuggling can sometimes become human trafficking.
- Human trafficking victims will try to seek help when they are out in public. Victims may be afraid, through coercion or threats of violence against themselves or their families, or they may not be in possession of their identification documents. Fear of law enforcement and/or deportation is a key factor in the reluctance of undocumented people to report their victimization.
The global landscape of trafficking
Clearly, human trafficking is more widespread than many people understand. The victims of human trafficking can be any age, race, or gender, and can be any nationality. However, two out of every three victims worldwide are female, according to the United Nations’ 2018 Global Report on Trafficking in Persons. Sex trafficking is the most detected form of human trafficking globally, with 59 percent of victims trafficked for sexual exploitation, according to the UN report. One out of three victims globally are trafficked for forced labor, and 7 percent for other purposes, including for the removal of organs.
The State Department report breaks countries into three tiers of how well they are complying with global standards:
- Tier 1—Fully complies with standards
- Tier 2—Does not meet standards, but is making significant efforts
- Tier 3 Watch List—Does not meet standards, is making significant efforts, but with significant levels of concern
- Tier 3—Does not comply and is not making efforts
The U.S. is ranked tier 1, with our neighbors Canada and Mexico ranked tiers 1 and 2 respectively. However, the UN Office on Drugs and Crime statistics show that the U.S. is globally one of the destinations for highest concentrations of trafficked victims—those brought across our borders, as well as those within our own communities.
Recent global initiative
The United Nations, at their September General Assembly meeting in New York, released a report called Unlocking Potential: A Blueprint for Mobilizing Finance Against Slavery and Trafficking. This important report has now formed Finance Against Slavery and Trafficking, which was created to support survivors of modern slavery and human trafficking in accessing financial services through a partnership of 12 financial institutions and six survivor services organizations.
FAST’s survivor inclusion initiative provides financial institutions, service providers, regulators, and other key stakeholders with the framework to match potential survivors with basic traditional banking services, such as checking and savings accounts, and debit cards. Many survivors have had their credit ruined by traffickers and have no employment history, so these steps are critical for survivors to return to a sense of normalcy.
Who are the U.S. victims?
Trafficking is not only common in large cities and Mexico border towns, but also in the heartland and in our coastal regions. Agricultural communities are plagued with labor trafficking. In a recent interview, Polaris staff shared information and trends from the National Human Trafficking Hotline and research with survivors, including:
- Migrant workers are recruited to the U.S. on work visas, then charged illegal fees for their visas. When workers complain, they are abused and threatened with deportation, and they are unable to escape debt bondage.
- Substance use issues can be a reason for involvement in sexual exploitation for adults and minors, and men and women. Drug dealers will incite and coerce addictions so that their victims will begin and continue to engage in the commercial sex trade.
- “Grooming,” manipulating someone into a state of trust generally by buying gifts and expressing romantic intentions, is a common way to lure young victims into sex trafficking. Minors from unstable family homes, those who were abused at a young age, and those in foster care can be particularly vulnerable to these types of traffickers.
Those who are especially vulnerable to human trafficking are people who are:
- In need of social safety nets
- Impoverished or homeless
- From areas of instability or armed conflict
- In the U.S. illegally or on temporary work visas
Citing a 2017 report by the National Domestic Workers Alliance, Polaris says victims of labor trafficking in domestic work can pay between $3,000 and $9,000 in recruitment fees, resulting in many foreign workers arriving for their first day of work already deeply indebted to their employer or recruiter.
Debt and immigration status (legal or illegal) not only keeps the workers trapped, but also silent and sometimes ashamed, afraid of deportation. ”There are people from where I come from who have sold their only piece of land just to buy a ticket to come here thinking that they will make money and better their lives. If they have been duped, how and where do they go back to?” asked one trafficking survivor in the Polaris report.
Where are the traffickers?
For financial institutions to help detect human trafficking, it is important not only to understand how victims become victims, but also to understand who the traffickers are. By analyzing the U.S. human trafficking hotline information, Polaris identified 25 distinct types of human trafficking business models occurring in the U.S. The more common typologies within our borders are:
- Escort services: Commercial sex acts that primarily occur at temporary indoor locations and includes hotel-based operations, internet ads, and out-calls to buyers.
- Residential sex trafficking: Call-in commercial sex occurring at a non-commercial residential location.
- Illicit massage businesses: Primary business of sex and labor trafficking is concealed under the facade of legitimate spa services.
- Outdoor solicitation: Potential victims are forced to find commercial sex buyers in outdoor locations such as on “tracks,” or”strolls,” or at truck stops.
- Pornography: Pre-recorded sexually explicit videos and images, including child pornography. This can include informally distributed pornographic material or commercial sex through a formal pornography company.
- Agriculture and animal husbandry: A farming business in which potential victims are exploited for their labor in growing/maintaining crops, cultivating soil, or rearing animals.
- Domestic work: Where an individual works for one specific household/family providing personal household tasks, cleaning, child care or adult caretaking, often living onsite with the family.
- Construction: Potential victims are exploited for their labor in carpentry, masonry, painting, roofing, etc.
- Restaurants and food service: Potential victims are exploited for their labor as servers, bussers, dishwashers, cooks, etc.
- Hospitality: Potential victims are exploited for their labor as hotel housekeepers, front desk attendants, bell staff, etc.
Knowing the possible victim signs for those who may come into your financial institution is also important, particularly for front line staff. The DHS lists several indicators to be aware of, such as:
- Those accompanied by a controlling person or boss (e.g., perhaps not speaking on their own behalf)
- Lack of control over personal schedule, money, I.D., travel documents
- Transported to or from work, or lives and works in the same place
- Debt owed to employer/crew leader, and inability to leave job
- Bruises, depression, fear, overly submissive
- A juvenile engaged in commercial sex acts
What guidance do financial institutions have?
Human traffickers go to great lengths to keep their victims in the shadows, so it’s possible that trafficking may never be visible in plain sight. However, financial institution staff are in a unique position to observe customers when interacting with them, and to detect and report suspicious financial activity that might be related to human trafficking. In addition, there are certain transaction indicators that AML professionals can monitor and, when spotted, report.
Specifically, in 2014, the Financial Crimes Enforcement Network issued advisory FIN-2014-A008, providing the red flags for financial institutions to identify possible human trafficking. This advisory should be used for your AML policies and procedures, training and customization of your AML monitoring system, which can detect important red flags.
Proper transaction monitoring systems will alert on the typologies and red flags. The AML system should also detect keywords to locate transactions such as RedBox, travel agencies, airline tickets, lingerie,, and high-volume fast food purchases. There are hundreds of red flags that may indicate human trafficking, from victim indicators to transaction traits.
Examples of transactional red flags include:
- A high volume of round-dollar deposits via wires, ACH, or cash in the range of $2,000 to $3,000, which could indicate payments to traffickers.
- Payroll checks that are cashed but the majority of funds are kept by the employer or are deposited back into the employer’s account. This activity may be detected by financial institutions with access to paystubs and other payroll records.
- Payments to employment or student recruitment agencies that are not licensed/registered or that have labor violations.
Examples of customer red flags include:
- Customers with an excessive number of accounts.
- Accounts of foreign workers or students in which the employer or employment agency serves as a custodian.
- Common signer(s)/custodian(s) in apparently unrelated businesses, and/or personal accounts. Similarly, common information (e.g., address, phone number, employment information) used to open multiple accounts in different names.
- Third-party escorts with customers when they open accounts or conduct transactions—perhaps under the pretext of requiring an interpreter—or, the third party escorting the customer might always have possession of the customer’s ID.
It is key for front-line staff to know the red flags and customer indicators that may be alerts for human trafficking. According to Polaris, one focus group survivor who made at least four separate deposits totaling over $5,000 into her recruiter’s account, pleaded, “I wish [someone]would have asked what all that money was for.” Alternatively, some National Human Trafficking Hotline callers have disclosed that they were instructed to use wire transfers to transfer money to their recruitment agencies, either based in their home countries or in the United States.
This highlights the importance of training on victim identification for customer-facing bank staff. Fortunately, many financial institutions have recognized this and have increased training for customer-facing staff in recent years. Local law enforcement, both at the federal and state level, could be a good source for free training for your financial institution. Generally, they are eager to partner with the financial sector to stop these bad actors in their tracks, and they can provide valuable insight for suspicious local activity.
A final way that financial institutions can assist in the fight against human trafficking is to help the survivors get their lives back on track with access to banking services. Victims often have ruined credit, or no credit or recorded employment history, and are unable to open a bank account. Polaris suggests that financial institutions may implement a “second chance” program for survivors of human trafficking. Typical second chance programs have different account requirements, services and fees. While such program features typically include low or no fees, they also have more restrictions than traditional accounts, such as limiting daily withdrawals. Offering second chance accounts is one way some banks are helping survivors rebuild their lives and prevent further exploitation.
By reporting the detected information, financial institutions and FinCEN can ensure that law enforcement is aware of the activity and thereby prevent trafficking from happening, rescue victims, and apprehend the perpetrators. Additional efforts by banks include training staff on human trafficking, and even posting information in the bank about how human trafficking victims can get help. Polaris notes that many human trafficking victims, especially in rural areas, do not have regular contact with anyone other than their traffickers, or others at job sites, except when visiting a financial services facility. One idea is to post information at the bank about how and why to contact the National Human Trafficking Hotline (888-373-7888 or text HELP or INFO to 233733 or “BeFree”).
Human Trafficking and Human Smuggling
A Frontline Compliance Training Course — Free to ABA Members.
Human trafficking is a multi-billion-dollar industry with small-time criminals, large organized crime syndicates, and terrorist organizations, robbing 25 million victims around the globe of their freedom. The U.S. is not immune, and in fact provides a large portion of the world’s demand for sex and labor slaves. U.S citizens and migrants in the U.S. on legal work visas are enslaved from all areas of the country. Human trafficking does not discriminate and takes victims from all socioeconomic, ethnic, and religious backgrounds, including women and men, boys and girls. Revenue from this lucrative activity flows through our U.S. financial system, but financial institutions are in the unique position to identify, prevent, and disrupt human trafficking. Through continued awareness within your own community and your financial institution, you will make a difference in stopping this heinous crime, and one day hopefully end slavery once and for all.
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size. She has successfully worked with institutions in developing BSA/OFAC programs, optimizing various automated solutions, and streamlining processes while ensuring all regulatory requirements are met. As senior manager of strategy and engagement at Abrigo, Luttrell provides insights that contribute and support long-term banking strategies based on analysis of market and industry trends, competitor developments, and financial and regulatory technology changes.