Money Laundering and Human Trafficking

Human trafficking is estimated to be one of the most profitable crimes in the world, with the International Labour Organisation estimating that forced labour generates over USD 150 billion per year.

Due to these sizeable proceeds, human trafficking is often a predicate crime to money laundering. Financial flows from this type of crime can differ significantly from one case to another, presenting unique challenges to law enforcement.

The July 2018 Financial Action Task Force (FATF) report Financial Flows from Human Trafficking outlines the key forms of human trafficking, and issues to consider in combatting these crimes.

 

What are the different types of human trafficking?

The FATF report identifies three main types of human trafficking:

  • Human trafficking for the purpose of prostitution or other forms of sexual exploitation (HTSE)
  • Human Trafficking for the purpose of forced labour or slavery (HTFL)
  • Human Trafficking for the purpose of removal of organs (HTRO)

 

Key issues to consider in detecting financial flows related to human trafficking

The report identifies key issues which are useful to consider in detecting financial flows related to human trafficking in general:

  • There will be greater opportunities for identifying signs of money laundering from human trafficking if the offender and/or victim are exposed to the formal financial sector or government – e.g. the victim opening a bank account or registering for tax purposes
  • Broad indicators which raise the possibility of money laundering need to be combined with specific secondary indicators that may signify money laundering from human trafficking
  • Wider contextual information can prove useful in identifying signs of trafficking – e.g. passport information, residency details and financial data
  • Human trafficking may be easiest to identify based on indicators at the victim level or at the lowest level of a criminal organisation; at higher levels of criminal organisations, the indicators present may suggest a number of different crimes

 

Human trafficking for sexual exploitation (HTSE)

Victims are often exploited over an extended period of time. Offenders are therefore required to meet basic needs of the victim such as food, accommodation and transport, so that the victim may continue to engage in the sexual exploitation. The financial transactions for these expenditures may be conducted directly by the victim or by the perpetrator or launderer involved in the human trafficking offence.

Examining these financial flows can help to identify victims of HTSE, as well as the launderers and ultimately the criminal networks.

The FATF report presents a number of HTSE case studies, identifying some of the key occurrences that allowed law enforcement to identify both victims and perpetrators.

Key indicators of potential HTSE victims included:

  • An individual incurring continued and excessive accommodation, food and transport expenses.
  • Transactions made through new payment technologies such as virtual currency, or email money transfers from foreign countries.
  • The suspected victim’s mobile number linked to escort service advertisements.
  • The suspected victim’s bank account mainly funded by third party cash deposits and fund transfers from various individuals, that appear excessive and not in line with the subject’s general level of wealth.

Key indicators of potential HTSE perpetrators included:

  • Money spent on websites which were identified by law enforcement as used to advertise trafficked women
  • Suspected individual observed to be regularly depositing cash using branch automated machines
  • Suspected individual accompanying another person in a bank, seen to be exerting control over that person

It is important to note that some of the above indicators are common to laundering the proceeds of crime in general, but examined in the context of other indicators more specific to HTSE (e.g. activity relating to escort service advertisements), they can provide further insight and evidence that contribute towards identifying victims and perpetrators of HTSE.

 

Human Trafficking for Forced Labour (HTFL)

HTFL involves the exploitation of another individual’s labour for profit. Persons are forced to work through the use of violence and intimidation, or by means such as manipulated debt, retention of identity papers or threats of denunciation to immigration authorities.

Most forms of forced labour involve some form of initial recruitment of the victim. This is often under the pretence of a better job overseas, at a significantly higher wage.

A number of case studies in the report demonstrate key ways in which the HTFL offence was identified:

  • Multiple employees being paid into a single account
  • Wage receipt followed by rapid withdrawal or transfer
  • An individual claims to act on behalf of an employee and demonstrates control of the person and their documents, when interacting with a government agency or reporting entity staff in person

Traffickers will often house their victims in substandard accommodation, with many victims sleeping in a single bedroom. In one case, 15 suspected victims were found to be registered at one address. Investigators looked at the property on Google StreetView, and saw that it could only comfortably accommodate 2 or 3 people.

 

Human Trafficking for the Removal of Organs (HTRO)

HTRO represents the minority of human trafficking cases, but causes significant harm to the victim.

Trafficking in organs and trafficking in persons for the removal of organs are different crimes, though frequently confused. In the case of trafficking in organs, the object of the crime is the organ, whereas in the case of human trafficking for organ removal, the object of the crime is the person.

The UNODC’s Assessment Toolkit for the Trafficking in Persons for Organ Removal provides detailed information on the offence which leads to two potential opportunities to detect the offence via financial flows:

1) Financing the infrastructure required to effect the offence, such as medical facilities and equipment, or procurement of medical equipment outside the context of an official medical care facility.

2) Payment to the various individuals required to carry out the offence, such as surgeons, medical facilities and staff, and those involved in the logistics of the crime, such as brokers.

The HTRO offence also provides the perpetrators with a more significant one time financial gain than HTSE and HTFL. For example, kidney procedures can cost up to USD $200,000 on the black market.

The payment itself may be provided to one individual coordinating the HTRO, or to a network of individuals each contributing to conducting the offence, in the form of a payment that is not in line with what would be reasonably expected of their employment. Analysing these financial flows can help to identify an instance of HTRO.