Discover more about our courses.
ICA is the trusted partner for you and your organisation.
Written by Jon Prentice on Tuesday June 4, 2019
A 2018 report by the Financial Action Task Force (FATF) highlighted that the proceeds from human trafficking exceeded $150 billion – a significant increase on the $32 billion figure quoted in a similar report from 2011 – making it the third most lucrative crime across the globe behind drugs and weapons.
There are over 40 million victims of human trafficking worldwide, with many being forced into labour, sexual exploitation and forced marriage, according to a 2017 study by the International Labour Organization. The majority of victims are located in developing nations, however an estimated 1.5 million people are trafficked amongst developed countries.
Promoting awareness of the issue has helped not only compliance professionals but also the general public to understand the scale of human trafficking. There is still more to be done, though, and understanding alone will not eradicate the problem. This is where focus has turned to the use of technology and widespread collaboration to compliment traditional methods of combatting human trafficking.
The traditional approach
Traditionally, human intervention has played an integral role in spotting and reporting the proceeds of human trafficking or even of identifying the victims of trafficking. From transaction monitoring to suspicious activity reports, the emphasis has largely been placed on staff members of financial institutions to pick out the unusual from the ordinary and report their concerns to the relevant body.
FATF stated in its 2018 report Financial Flows from Human Trafficking that:
‘the more exposure the offender and/or victim have to the formal financial sector or government, the greater the opportunities for identifying signs of money laundering from human trafficking’.
This puts financial institutions front and centre in the fight against human trafficking. But the traditional approach unfortunately has its limitations. The volume of daily transactions that flow through financial institutions is often just too large to be able to effectively police given staffing resources. Such methods also rely heavily on employees being adequately trained to spot the tell-tale signs of the proceeds or victims of human trafficking.
The traditional approach is also often undertaken in silos, meaning firms don’t communicate their concerns to other institutions or even other departments within their own firm, or information is retained within one jurisdiction and not shared amongst others. Of course this lack of collaboration does little to help the individuals being trafficked.
The role of technology
The use of technology is becoming imperative in the fight against trafficking. At a 2019 summit in Vienna, Britain’s Princess Eugenie – an anti-trafficking advocate – and US anti-trafficking ambassador John Richmond called for the use of technologies, from smartphone apps to blockchain, to disrupt modern day human trafficking, given the number of victims worldwide exploited online.
The FinTech and RegTech revolution of recent years has become a key component in the future of identifying the signs of human trafficking. Data analytics, machine learning and AI are becoming more commonplace in the compliance world, all of which can ease the onus on human intervention to detect anomalies.
In Financial Flows from Human Trafficking, FATF pointed out that ‘in general, the victims of human trafficking were identified through continued and excessive accommodation, sustenance and movement of types of expenses (e.g., airline tickets, taxi fares, car hire, train tickets)… excessive continued incurrence of these expenses may demonstrate that an individual is a victim’.
Technology is now available that can automatically detect and flag up the these kind of transaction types, allowing compliance individuals to spend more time analysing data and reporting their findings to authorities, rather than searching for the transactions in the first place.
(Further information on the role of technology in preventing money laundering will be available on Insight in the coming weeks)
Technology and collaboration
In 2017 a group of technology companies, including Amazon, BT, Microsoft and Nokia, came together to form ‘Tech Against Trafficking’, a collaborative effort aiming to further support the eradication of forced labour and human trafficking.
The group plan to utilise evolving technologies to make it easier to detect victims and the proceeds of human trafficking, share information across different jurisdictions and make it easier to report the trafficking itself.
The areas which the group plans to consider to tackle human trafficking include:
Since its creation, the group has identified more than 260 anti-slavery tools across an array of different technologies including facial recognition software to AI, with a further update expected for this summer.
A collaborative approach
In 2018, FATF encouraged financial institutions to share with stakeholders the different money laundering risks associated with human trafficking. FATF also stated that the creation of national coordination and information sharing mechanisms may be beneficial.
Other groups, such as Stop The Traffik, have championed the need for collaboration, through communication with various different financial service organisations, law enforcement agencies, businesses and volunteers to share information and data, in addition to developing products and tools to combat trafficking through the analysis of trafficking data. The group have created a ‘model of disruption’ aimed at combating human trafficking through intelligence-led prevention and information sharing.
More and more importance is being placed on collaboration and communication in order to fight human trafficking, as it also is with combating other money laundering offences. More information on why collaboration is vital to combat money laundering is available here.
Watch the ICA’s The True Cost of Financial Crime series to learn more about human trafficking and how it can be combated.
You may also enjoy reading:
This article forms part of the #BigCompConvo - Join us as we explore and debate the latest challenges and issues facing you and regulatory and financial crime compliance professionals all over the world. If you’d like to contribute an article as part of the Big Compliance Conversation get in touch with us at firstname.lastname@example.org
Thank you. Your comment is awaiting moderation and should appear on the site shortly.
Required fields are not completed, please ensure all required fields (*) have been filled in properly.
You can leave the name empty should you wish to remain Anonymous.