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Nine Tips For Identifying Human Trafficking.

Updated: Feb 23

Among the range of financial crimes out there, one that too often eludes detection is human trafficking.

“Human trafficking is oftentimes overlooked at financial institutions,” Kristin Parker, RiskScout’s Director of Compliance, told an audience at an ACAMS webinar on “Raising Awareness to Fight Human Trafficking,” held on January 31st. “It’s an uncomfortable subject to talk about,” she said, so financial institutions sometimes fall short when alerting reviewers to all the red flags out there.

Parker recalled that in an earlier role as a BSA professional for a $4 billion bank in North Carolina, she quickly educated herself about human trafficking.

While she witnessed examples of human trafficking taking place in nail salons and massage parlors, evidence of this crime also appeared within individual bank accounts. In one instance, said Parker, an individual in a remote area began ordering around $400 worth of DoorDash deliveries four or five times a day. Upon closer inspection, she found cash transactions in the account that also seemed suspicious. She contacted the local FBI office, leading to the discovery of a large human trafficking ring in the mountains of Virginia.

“I believe that every financial institution, no matter the size, can find human trafficking,” Parker told webinar participants.

The numbers support Parker’s claim.

According to a 2021 report Annual Report.pdf by the US Department of Homeland Security, human trafficking yields $150 billion in profits globally. An estimated 25 million people are victimized worldwide in this way, with 80 percent in forced labor and 20 percent in sex trafficking.

Here are some tips for bankers seeking to improve their ability to identify human trafficking:

Tip 1: Recognize that human trafficking incidents are hard to detect.

Individuals being trafficked typically blend into the background; in addition, they are often restricted from having access to anyone who might become suspicious and tip off the authorities.

Ironically, financial professionals are often better positioned to detect human trafficking than members of law enforcement. That’s because they can see patterns of financial activity that are consistent with trafficking. An individual suddenly making high volumes of low value transactions that defy logic could be a red flag. (Think Parker’s DoorDash example.)

Bankers have the ability to dig deeper when, say, a business pays in cash, rather than issuing payroll checks.

Tip 2: Try to identify legal businesses that are fronts for illegal activities.

Often, human traffickers create and use legal businesses to hide their illegal activities. For financial professionals, the deception can sometimes be hard to see because organized crime or individuals doing the trafficking are skilled at covering their tracks.

Tip 3: Look beyond traditional transaction monitoring systems.

The hallmark of many human trafficking incidents is high-frequency, low-dollar-amount transactions. A pattern like this often falls below the dollar threshold for monitoring systems.

Financial institutions generally don’t want to lower the monitoring threshold because of other problems that arise. Were a banker to set the threshold for detecting suspicious activities at a low enough dollar amount to uncover incidents of human trafficking, then the system may turn up too many false positives.

“You don’t want to have a lot of garbage-in, garbage out,” said Parker. “People start getting numb to that.”

Tip 4: Educate the lines of business on what trafficking looks like in your region.

An important aspect of catching traffickers is educating an institution's staff on what this crime looks like within your institutional footprint.

Parker emphasized that it’s not enough to train the BSA/AML team about human trafficking in the abstract. Ideally, a bank or credit union will educate everyone from the front-line tellers to the mortgage and commercial lending teams on this type of criminal behavior as it is occurring in your region of the country.

What’s more, human trafficking patterns can change quickly.

“When you do your training,” said Parker, “you can’t just rinse and repeat the same training every year. Your training has to change as the products change, or as risks of human trafficking emerge in different areas.”

Tip 5: Check loan defaults and credit-card fraud for signs of human trafficking.

Individuals who are trafficked are often exploited financially. What appears to be an instance of credit card fraud might instead indicate that an individual is being exploited.

When unusual financial activities occur in a very short space of time, that, too, can be a red flag.

“Don’t always look at a default as just a default,” advised Parker. She urged front-line banking personnel to ask questions of customers-- and then escalate anything suspicious to the BSA/AML department for further investigation.

Tip 6: Establish relationships with law enforcement and human trafficking prevention organizations.

Patterns of human trafficking vary by geographic location; what constitutes a red flag in one state may not be suspicious in another.

Because the telltale signs of this type of crime vary so widely, it makes sense to partner with local law enforcement and with taskforces or agencies, such as the Polaris Project and the Center to Counter Human Trafficking (CCHT). Local experts on human trafficking can explain what patterns of trafficking are prevalent in your area.

Tip 7: Stay abreast of the latest wrinkles in the payment world.

The increased use of crypto and of payment apps from PayPal to Zelle and Venmo is giving human traffickers a number of new vehicles for hiding their activities.

Tip 8: Pay attention to FinCEN alerts.

FinCEN issues alerts on human smuggling along the southwest border of the United States.

In addition, it has added a box to its Suspicious Activity Reports, or SARs, that can be checked when human trafficking is suspected.

Tip 9: Remember that KYC doesn’t stop at onboarding.

The best way to detect human trafficking is to have a robust KYC (Know Your Customer) program in place. Financial institutions that ask questions and keep abreast of changing business patterns are more likely to detect irregularities that point to human trafficking.

“We always emphasize KYC, or Know Your Customer, at onboarding,” concluded Parker. “What really matters, though, is knowing your customers throughout the life of the relationship.”


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