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Disrupting Human Trafficking: The Role of Financial Institutions

Tom Keatinge and Anne-Marie Barry
RUSI Publications, 14 March 2017
Centre for Financial Crime and Security Studies, AML/CTF, Organised Crime
This report looks at the growing menace that human trafficking poses worldwide and the crucial role that global financial institutions have in tackling it.

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It is estimated that each year, across the globe, 20.9 million people are trafficked for forced labour 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.

As this report will reveal, banks and other financial service providers are increasingly seeking to address this gap 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. As entities with potential access to the financial data of both traffickers and their victims, the financial industry has the ability to play a vital role in the fight against this crime.

This report offers the following recommendations for future action:

  1. Financial institutions must continually seek knowledge from law enforcement and THB-focused NGOs to ensure that staff training and investigation approaches reflect expert insight and guidance on:
    1. The changing nature of human trafficking, including typologies (for example, enabling a more balanced focus between sexual and labour exploitation; the former currently receives a disproportionate degree of focus).
    2. High-risk industries and countries of origin, destination and transit for THB.
    3. Financial crime trends, such as greater use of online payments and use of prepaid cards, as well as increased diversification in the use of trafficking victims beyond sexual and labour exploitation, such as for theft, organised property crime, benefit fraud and drug production.
    4. The changing nature of trafficking business models, which react to legislation, disruption and the emergence of new ‘markets’.
  2. More generally, engagement with NGO groups that support victims of human trafficking can provide both an insight into the methodologies used by traffickers and also a victim-focused perspective, which will help create more precise profiles and red flags for trafficking-related financial transactions.
  3. Financial institutions should interpret law enforcement, NGO and other guidance sources to ensure these are relevant for, and applicable to, both staff in branches and internal financial intelligence and investigation teams. Human trafficking should feature as a specific element of all financial crime-related staff training, including the introduction of mandatory tests to ensure that front line and investigative staff have sufficient awareness and understanding of how to detect the crime.
  4. Financial institutions and law enforcement agencies must continue to build and maintain collaborative and supportive relationships in which there is sharing of information and typologies. 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. Forums such as JMLIT or the US Bank Secrecy Act Advisory Group (using Section 314(a) of the USA PATRIOT Act) should be used by law enforcement agencies to provide regular and detailed feedback or specific, anonymised guidance to financial institutions based on human trafficking-related suspicious activity reports so that financial institutions can fine-tune monitoring and investigations.
  6. Law enforcement agencies and policymakers should ensure the regular participation of NGOs which have specific expertise or front line experience in the field of anti-trafficking in such public–private sector forums.
  7. Recognising the reliance placed on private sector compliance tools by financial institutions, greater investment should be made in compiling human trafficking-related negative media content, such as that provided to Thomson Reuters by Liberty Asia, to improve the effectiveness of financial institutions’ automatic transaction and client screening.
  8. Financial institutions should ensure that their Know Your Customer (KYC) and ongoing due diligence processes consider the extent to which their clients are exposed to human trafficking in their business or supply chains.

ABOUT THE AUTHORS

Tom Keatinge is Director of RUSI’s Centre for Financial Crime and Security Studies. His research focuses on issues at the intersection of finance and security, including sanctions, terrorist financing, human and wildlife trafficking, and the role that public–private partnerships play in tackling these issues. Prior to joining RUSI in 2014, he was an investment banker at JP Morgan for 20 years. He has an MA in Intelligence and International Security from King’s College London.

Anne-Marie Barry is Lead Researcher at Stop The Traffik and Finance Against Trafficking. She works with businesses to address issues and risks around human trafficking and modern slavery within their supply chains and operations. She is also a trained volunteer First Responder for potential victims of modern slavery under The Salvation Army.

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