Top tips, tricks to detect red flags of human trafficking in your fincrime compliance program, including inconsistent income, frequent CC, booking cancellations

human trafficking red flags and AML and super bowl

Detail of poster developed pro bono by McCann Erickson for anti-sex trafficking campaign geared to the Super Bowl on Feb. 2. Credit: McCann Erickson To read the full Thomson Reuters Foundation story, click here

The Skinny:

  • While many sports fans were preparing for an anticipated epic duel in Super Bowl LV between an aging legendary gunslinger and a young gun with a cannon for an arm, by grilling dogs and burgers, human trafficking groups were cooking up much more sinister machinations: profiting off of skin and misery.
  • Even with the restraint required by the global pandemic, sporting events – particularly mega events like the Super Bowl, which draw thousands of people and hundreds of millions of dollars in revenues to host cities – are magnets for human trafficking networks, looking to take advantage of the influx of humanity, according to analysts and media reports.  
  • But those massive financial flows mean more opportunities for savvy anti-money laundering (AML) compliance teams to uncover ties to trafficking networks – whether during the mayhem and maelstrom of a Super Bowl in Tampa between the Tampa Bay Buccaneers and the Kansas City Chiefs, or when these illicit groups move on and try to set up shop in your city.
  • Below are some helpful indicators and resources to assist banks in their efforts to detect behavior that could indicate a human-trafficking situation, including key tactics and insight from speakers and top thought leaders from recent ACFCS conferences.

By Brian Monroe
bmonroe@acfcs.org
February 10, 2021

While many sports fans were preparing for an anticipated epic duel in Super Bowl LV between an aging legendary gunslinger and a young gun with a cannon for an arm, by grilling dogs and burgers, human trafficking groups were cooking up much more sinister machinations: profiting off of skin and misery.

Even with the restraint required by the global pandemic, sporting events – particularly mega events like the Super Bowl, which draw thousands of people and hundreds of millions of dollars in revenues to host cities – are magnets for human trafficking networks, looking to take advantage of the influx of humanity, according to analysts and media reports.  

“In recent years, the increased visitors in host cities tend to encourage the criminal activities of human trafficking and sex trafficking,” according to the report. “It is often found that criminally organized sex rings will travel from one location to another to meet the demand of large sporting events.”

As well, according to the Institute for Sport and Social Justice, these “types of large sporting events can lead to a culture of partying, drinking, and, too often, engaging in paid sex activities,” according to the report.

In a 2014 ILO report, human trafficking earns a profit of roughly $150 billion a year for traffickers with 66% of the global profits coming from sexual exploitation, according to the report, adding that sex and labor trafficking is “second only to drug trafficking as the world’s largest criminal industry.”

But those massive financial flows mean more opportunities for savvy anti-money laundering (AML) compliance teams to uncover ties to trafficking networks – whether during the mayhem and maelstrom of a Super Bowl in Tampa between the Tampa Bay Buccaneers and the Kansas City Chiefs, or when these illicit groups move on and try to set up shop in your city.

Below are some helpful indicators and resources to assist banks in their efforts to detect behavior that could indicate a human-trafficking situation, including key tactics and insight from speakers and top thought leaders from recent ACFCS conferences. 

To visit the ACFCS resource page, click here.

One key tactic to uncover potential ties to trafficking groups in your institution is looking for accounts without standard sources of income and for credit cards, frequent cancellations, according to David Creamer, Director of AML Solutions Delivery at Scotiabank and Rosie McWhorter, an AML Senior Investigator II in the Special Investigations Unit at Capital One, two frequent speakers at recent ACFCS conferences. 

Some examples include:

Cash Deposits

  • Excessive deposits, particularly in round amounts, like $50, $150 and $200.
  • Abnormally timed deposits, such as between 10 p.m. and 6 a.m.
  • Large denominations of deposits. If normal cash-intensive business, you will have a mix of denominations. Coins. $5 and $10. If human trafficking, you will largely be taking in $50 bills, $20 and $100 dollar bills. Illicit groups thinks banks don’t look for that, but denominations in deposits are recorded at the branch level.
  • Deposits in multiple cities, particularly if they are close to each other, over a period of time. Traffickers will take victims from city to city and rotate throughout the country in urban centers in the country. Look for the the impossible trip, Halifax and Vancouver in the same day. If you see that as an AML analysts, it means multiple people are using the same account as a funnel account.

Peer to peer payments (EMT, Venmo, etc.)

  • Payments in round consistent amounts. An account that is taking in a lot of these have some telltale signs as well. The fact that the payments are in some sort of increment. $150, $300 and $50, means someone is buying something in increments of hours.
  • Multiple originators with some repetition. Many different parties paying into the same account over time and repeat customers. Look for customer drift in multiple cities. Look for a single email address associated with multiple bank accounts or the opposite, a single bank account associated with multiple email addresses, and those tied to online advertising or escort sites.
  • Funnel accounts and Peer to peer transfers. They know that is a vulnerable area, used accounts to collect the P2P transfer, then immediately hit an ATM and withdraw the money.
  • They know the behavior to stick out, so when a P2P transfer hits a bank account, they pull it out immediately, sometimes in as little as 30 minutes. It is a smurfed account. If that is caught and shut down, they won’t lose a lot of value. A key red flag is 5 – 10 email money transfers and then 5-10 withdraws done on that periodically.

Payroll

  • Multiple payroll deposits into one account, which could be tied to slave labor. This would look like multiple government benefit checks to the same account. Clearly intended for more than two or three people, meaning the person is in control of the labor and taking the money and paying it out – but much less to those actually doing the work.
  • Multiple deposits from processors for online adult content, such as Fenix, Onlyfans and the like.

One key to uncover trafficking ties: frequent card cancellations

But AML analytics teams also uncovered what Creamer considers the “Number One indicator” that the bank sees for human trafficking: frequent cancelations.

What is an example of that?

When a trafficker, for instance, makes a reservation for five hotel nights, putting $500 on the credit card. But then shows up at the hotel and asks to cancel the card transaction so the person can pay the $500 in cash.

The traffickers “think they are being clever with the cancellations,” he said. “But that itself leaves a marker. It sticks out like a sore thumb.”

Human trafficking red flags in accounts: Income oddities, account aberrations

Fincrime transaction analysts should also look for income inconsistencies, such as money coming in in regular increments, but not through known companies, human resources firms or payment processors typically tied to ACH and related transactions.

Here are some further red flags for AML teams to better parse out potential trafficking networks:

  • Atypical sources of income: For instance, credit cards, gift cards and virtual currency, rather than ACH and wires. The source of the funds is illicit, so you won’t see normal paychecks.
  • Unusual activity and product use in the account: For instance, why is a personal account getting deposits from places all over region through ATMs, then wiring the money to Thailand or the Philippines? The customers are less secretive than the perpetrators. The average person cancels their credit card once a year. A trafficker, nearly eight times a year.
  • Personal accounts: As well, why is the personal account spending so much money on online advertising. Human traffickers used to buy ads on Backpage, now they are using generically named sites. They are now buying ads on Tinder and Facebook Dating. These transactions could be seen through a perpetrator or victim account. The traffickers are not also always men, many are women.
  • Careless customers: A male customer might use their credit card to pay for services at a nail salon at 2 a.m. Men don’t need to do their nails, or get massages, at 2 a.m.
  • Connections to known entities: Massage parlors, escort agencies or others who have been caught before and are at it again. These could also be tied to advertising sites or high risk jurisdictions.

Credit card transaction tales: why rent a car – in your own city?

Suspicious credit card use

Taxi/ride share/car rental: Car rental in the city you live in. Why? They tend to use the same locations, and they don’t want to have the same car and plate sitting in the same place day after day.

Pharmacies and fast food

Basic needs still have to be taken care of, but they tend to do it on the cheap.

The frequency of pharmacy and fast food is at the same rate as normal customers. But the average person spends about $12, but the average person suspected of human trafficking spends about $97. The same is true at fast food, spending as if they are feeding a large family.

Lodgings

Hotel or more recently longer stay Airbnb: This used to be almost exclusively hotel and motel locations. But instead of using hotels and changing every few days, now they are getting an Airbnb and rented for a longer period of time, but moving in different girls.

A lot less scrutiny on it. Just one large transaction rather than a lot of transactions during the month. One thing that really stands out are cancellations at hotels. They really want to consume their cash. Get a booking on a credit card, then cancel it and use the cash, for hotel and car rental.

Airline/travel

Bookings with credit card to and from human trafficking source countries, like Thailand, China, and other places in Asia to regions like the U.S., EU, and Canada. Also related cancelations and payments with cash.

Mobile phones

Cell phone or multiple cell phone bills. Everyone has a cell phone, but these guys have three or four. Bills can be in excess of $4,000. They are also constantly switching out the sim chip, rather than buying and dumping burner phones.

Fincrime sector responses: Tackle with technology, training, tactics at teller level

Machine learning approaches: Feature engineering, customer attribute data, transaction connections. In short, merge client, transactional and network views.

Vigilance in the first line: Many of the best reports and tips to uncover human trafficking networks, even in the era of AI, automation and machine learning, come from the intuition of a teller or business line professional.

Public-private partnerships: In many countries, like the U.S., Canada and other regions, banks and law enforcement have teamed up to better understand the nuances transactional red flags of trafficking groups to update AML monitoring systems and human training, in and out of dedicated compliance functions, to better find ties to traffickers and rescue victims.

As well, some third-party software vendors and technology companies have created free algorithms and scenarios, developed with current and former investigators, with the goal of sharing these scenarios with banks of all sizes.

Still struggling? 

Simply reach out to other professionals in groups like LinkedIn and other social media arenas, which, for instances, has multiple groups of compliance professionals dedicated to fighting human trafficking and sharing tips, tactics and resources, such as here and the Anti-Human Trafficking Intelligence Initiative (ATII) here