Identifying and Reporting Human Trafficking and related Money Laundering

In observing this January’s National Human Trafficking Prevention Month in the United States, at a related earlier dialogue, someone had asked me if there were red flags or good practices on detecting money laundering concerning cross-border modern slavery to not only help to disrupt such an odious crime but to also help communities identify victims, prevent further exploitation, and stop such trafficking.

Human trafficking occurs when a trafficker uses force, fraud or coercion to control another person for the purpose of engaging in commercial sex acts or soliciting labor or services against his/her will. Force, fraud, or coercion need not be present if the individual engaging in commercial sex is under 18 years of age.

I know that different USG federal agencies in the past have released such information including The Financial Crimes Enforcement Network (FinCEN), the Blue Campaign, National Human Trafficking Hotline, and through partnerships with civil society groups, which can be found below.

Do also recall FinCEN’s outlining some typologies and evolving techniques that human traffickers and facilitators have used to launder money:

1. Front Companies: Human traffickers routinely establish and use front companies, sometimes legal entities, to hide the true nature of a business, and its illicit activities, owners, and associates. Front companies are businesses that combine illicit proceeds with those gained from legitimate business operations.

2. Exploitative Employment Practices: Some seemingly legitimate businesses use exploitative employment schemes, such as visa fraud and wage retention, to amass profit from labor and sex trafficking. For instance, some labor recruiters mislead or defraud victims, taking advantage of workers before and after they enter the United States.

3. Funnel Accounts: Funnel accounts generally involve an individual or business account in one geographic area that receives multiple cash deposits, often in amounts below the cash reporting threshold, from which the funds are withdrawn in a different geographic area with little time elapsing between the deposits and withdrawals. Human traffickers may use interstate funnel accounts to transfer funds between geographic areas, move proceeds rapidly, and maintain anonymity.

4. Alternative Payments: Methods In addition to payment via cash, traffickers also have accepted payment via credit cards, prepaid cards, mobile payment applications, bitcoin and other convertible virtual currencies. Buyers of commercial sex use prepaid cards—a method of payment using funds paid in advance, which can be acquired anonymously with cash or on darknet websites—to register with escort websites and to purchase sexual services, flights, throw-away phones, and hotel rooms.

Find also financial Red Flag Indicators of Human Trafficking below for financial institutions.

If you or someone you know is a victim of human trafficking, we’re here to provide the support you need. (National Human Trafficking Hotline)

At the Illicit Shadows project, we are uniting with other committed partners to inform impacted communities on the multi-dimensional impacts and criminal-threat convergence harms of illicit trafficking networks, and to work across borders to eliminate all forms of modern day slavery, human trafficking, and child sexual exploitation. It is important to “know the signs” employed by human traffickers and raise related money laundering “red flags” so that collectively working across sectors, we can put imputed bad actors behind bars, and help to bring victims home and into safer, secure environments. David M. Luna, ICAIE, Executive Director