Human Trafficking and Money Laundering.

Human trafficking takes place in different forms and for different purposes such as sexual exploitation, forceful marriage, illegally procuring and trading organs, free or forced labour, slavery etc. as stated in FATF’s report of HT. The victims are usually taken by coercion, force or fraud and then exploited on an ongoing basis for profit. In order to escape from regulatory bodies and enforcement officials, traffickers move these victims across international borders and several locations. Exploiting victims can cause grave emotional and physical damage to them. Apart from all of this, the proceeds of human trafficking is not only illicit, but also used to fund criminals and terrorist groups. Traffickers conceal these illicit proceeds by laundering them.

One of the best ways to counter this issue is by looking out for red flags. Spotting red flags and suspicious activities requires not only a detail oriented approach but also analysing the situations and unusual information at hand. There have been several instances where regular people leading regular lives have been caught conducting illegal activities such as trading organs, forced labour, modern slavery or running prostitution rackets involving minors. Recently, there was a case in Romania where underaged girls are being sold to brothels based in the UK by their own parents. Such incidents are barely reported or come under the spotlight due to the fact that not every criminal looks or seems suspicious. The need for spotting suspicion is of utmost importance at this point considering the fact that money laundered through human trafficking comes from a variety of sources and places. Some of the red flags to look at are:

1. Bank accounts being shared among several people (victims). Monitoring transactions of such accounts can help track the traffickers.
2. International transfers in huge amounts from one location to another and withdrawing such funds immediately.
3. An income or lifestyle that does not match the client’s profile.
4. Suspicious account activities from different time zones and high risk countries.
5. Anonymous transactions using gateways and open banking systems that require lower KYC and due diligence standards.
6. Using cash to invest in real estate or goods of a higher value.

The above mentioned points do not assure or suggest that there is human trafficking, but they definitely do need to be looked into for better due diligence. The client’s transactions and profile should be scrutinised and observed continuously. There are several sources available for every organisation that would help get to know more about human trafficking and it’s relationship with money laundering such as the FATF, human rights organisations and legislations in every jurisdiction pertaining to human rights and financial regulatory requirements. Taking action and following some of these steps could help us curb this problem and eliminate any form of financial crime through trafficking.

Please note that all opinions made on this blog should be treated as a guide and not legal advice.