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More U.S., U.K. banks harnessing technologies, changing tactics to identify human trafficking

Thursday, March 23, 2017   (0 Comments)
Posted by: Brian Monroe
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By Brian Monroe
bmonroe@acfcs.org
March 23, 2017

More banks in the United States and United Kingdom are tuning financial crime transaction monitoring systems, updating training and proactively looking through customer databases to better uncover and report on the rising scourge of human trafficking.

But more can be done, including more engagement with law enforcement, civil society groups and even victims assistance programs in human trafficking transit and destination countries, according to a new report by renowned defense think-tank, the Royal United Services Institute (RUSI).

Financial institutions in these two countries are “introducing a range of measures, including: training front line staff; building typologies; undertaking proactive transaction database investigations; and working with other financial institutions and law enforcement agencies,” to determine which transactions could be tied to a larger human trafficking ring or criminal group.

While the report only details efforts in the U.S. and U.K., human trafficking is a global pandemic. It is estimated that each year, across the globe, nearly 21 million people are trafficked for forced labor and sexual exploitation.

In the EU and developed countries, trafficking in human beings (THB) “reaps annual profits of $46.9 billion. In the UK alone, thousands of people are exploited, not just in illegal operations, but also within legitimate business settings ranging from agriculture and factories to nail bars and car washes.”

Even though the report concludes banks can do more to identify illicit transactions tied to human trafficking, institutions interviewed for the report “claimed that a number of finance-led anti-human trafficking measures have contributed to the successful uncovering of gangs engaged, in particular, in sexual exploitation.”

Banks 'less engaged' in fight, but anxious to change

Overall, however, “compared with other industry sectors whose long and complex supply chains are at risk of being touched by labor exploitation, the financial services industry in the UK and around the world has thus far been relatively less engaged in efforts to disrupt” human trafficking."

But that needs to change because banks have “potential access to the financial data of both traffickers and their victims,” giving them the ability to play a vital role in the fight against this crime.”

The institutions involved in the report were “enthusiastic” to help, and are redoubling efforts to uncover human trafficking by “assessing the services they source and the clients they fund, and attempting to apply their transaction monitoring and data analytic capabilities to support the pressing need for improved evidence that could boost THB-related prosecutions.”

The report by, RUSI – an independent think tank engaged in cutting edge defense and security research – also detailed key hurdles for banks broadly to tackle human trafficking networks, chiefly how varied and subtle the transactional tells of the crime can be.  

The top challenges include the “often unremarkable nature of transactions related to the crime, the difficulty in automating risk-factor screening and the consequent resource needed to investigate transaction data manually, as well as the level of collaboration needed with other actors,” including law enforcement, private thinktanks and non-government groups.

The authors concluded that while the financial institutions interviewed for the report are “unanimously willing to contribute to the disruption of human trafficking, developing an effective response is far from easy and requires considerable effort, coordination and investment of time.”


So what can banks do to better uncover customers and transactions that could be tied to human trafficking? Here is what RUSI has to say:

This report offers the following recommendations for future action:

  1. Seek knowledge from law enforcement and THB-focused NGOs to ensure training and investigation approaches reflect the latest expert insight and guidance tied to typologies, high-risk industries, origin, destination and transit countries, payment trends and business models.
  2. Engage with NGO groups that support victims of human trafficking, which will help create more precise profiles and red flags for trafficking-related financial transactions.
  3. Ensure law enforcement, NGO and other guidance sources filter to branches and internal financial intelligence and investigation teams. Introduce mandatory tests to ensure front line and investigative staff have sufficient awareness and understanding.
  4. Engage law enforcement and share typologies and trends. Public–private partnership forums, such as JMLIT, should act as fusion cells and disseminators of human trafficking-related indicators and intelligence gathered from court cases and convictions.
  5. Be part of forums such as JMLIT or the US Bank Secrecy Act Advisory Groups, through 314(a), should be used by law enforcement agencies to provide regular and detailed feedback or specific, anonymized guidance to financial institutions Law enforcement agencies and policymakers.
  6. Invest in compiling human trafficking-related negative media content to improve the effectiveness of financial institutions’ automatic transaction and client screening.
  7. Ensure KYC and CDD processes consider the extent to which their clients are exposed to human trafficking in their business or supply chains.

U.S. banks, law enforcement take the reins

Estimates by the US Department of Justice and other public and private agencies state that between 20,000 to 50,000 people, mostly women and children, are trafficked annually into the United States, though those figures are debated by experts and the government is attempting to nail down more precise numbers.

Banks such as JPMorgan, Wells Fargo and Bank of America have been devising typologies and devoting additional investigative resources to uncover ties to human traffickers and smugglers as early as 2010, even before red flags were released in reports by the Paris-based Financial Action Task Force (FATF) in 2011 and early 2012, according to compliance officers at these institutions.

These efforts have not been limited to the banking sector.

In 2013, Western Union announced a partnership with the US Department of Homeland Security to provide human trafficking training and awareness programs to agents in the money transmitter’s global network.

In recent years, some technology providers like NICE Actimize and SAS have also started incorporating human trafficking detection rules in their monitoring solutions.

Currently, there are more than a dozen initiatives in Congress tied to human trafficking centered around stronger penalties, more aid to victims, and attempting to prevent individuals from being trafficked by bolstering social services and helping runaways and other vulnerable persons.

The US Treasury’s Financial Crimes Enforcement Network released guidance in September 2014 on how banks can better identify the red flags of human trafficking, highlighting issues such as structuring and funnel accounts.

However, the guidance also stresses close attention to customer behavior and their interactions with front line staff, through observing how customers act at the counter, who is with them, and if there are any discrepancies in their actions or documents, such as checks with clearly different handwriting.


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