Human trafficking: who is accountable?

Blog | 4 Nov 2022

Human trafficking.

Let’s call it what it really is.


Modern slavery victims are coerced to work for no money or false promises of debt repayment. Forced labor amounts to around 75% of human trafficking. Sex trafficking makes up the other 25%, yet it actually accounts for almost three quarters of total human trafficking profits in North America. And we’re not talking small change here. Human trafficking generates more than $200 billion annually.

Seventy percent of human trafficking victims are women and girls. One in four are children. A shocking 50 million humans are trapped in modern slavery. That’s up 10 million since 2016 and more than four times the number of African slaves shipped across the Atlantic between 1525 and 1866.

This is truly sickening.

Sad to say, but most of us have at some point contributed to the problem in our quest for bargains. If we buy a T-shirt for less than $10 or a pair of jeans for less than $50, there’s a good chance it was made through forced labor. It’s amazing how many products are actually produced by child and coerced labor. In fact, a massive list of such goods, broken down by country, is regularly maintained by the U.S. Department of Labor.

Human trafficking can’t be dismissed as a distant problem. Economic migration perpetually brings the scourge right to our shores, and recruitment isn’t relegated to foreign victims. In fact, in the U.S. alone, traffickers regularly target their prey through social media and other technologies, with 70% of those targets being between 12 and 14 years old.

As I said, human trafficking generates more than $200 billion annually. And the sex trafficking component is almost an all-cash business, with proceeds regularly funneled through our own financial institutions. So not only do we owe it to ourselves to become individually aware of this global crisis, but we also have to bring that awareness to our work environments as well as our personal choices.

But we’re not human trafficking experts

As financial professionals, we may not have the expertise needed to completely wipe out this societal illness. But it is within our power to recognize the money-laundering trends associated with human trafficking and to make it much more difficult for these despicable actors to succeed. But to do this, we must be more creative, more inciteful to the ease with which our financial system is being arbitraged. The necessary indicators aren’t found in the rules approach of existing monitoring systems, which were developed in the early 2000s using 1980s and 1990s behaviors. While those approaches may have evolved and still have value, alone, they have been outmaneuvered by modern criminals and traffickers. And during COVID, they have been embedded so effectively that detecting them is increasingly difficult.

But over the last decade, the tools available to us have metamorphized to find signal in the noise, to find that needle in a stack of needles that seeks to hide, to look the same as everyone else. We now have technologies that can examine not just transaction flows but also behavioral indicators and inferences and put them into the context of events happening across time, across multiple entities, asset classes and locations and inject transparency into the opacity.

An easy example: let’s say a city hosts a major sporting event, a conference or a convention. Around this event, we may see a significant spike in ATM cash credits, generally under the $10,000 limit, as sex workers are flown in, as one described “like cattle.” At the same time, there may be a spike in food deliveries to a new location. Or we may see girls between 18 to 20 suddenly gain great credit ratings as their bodies are not just exploited, but their identity also used for credit card and payment frauds. Exploitation is a portfolio using a human as the primary fungible asset.

Using artificial intelligence (AI) and machine learning with rules, it is possible to trace relationships between data points that are too complex for the human brain to identify – across asset classes, behaviors, locations, crimes. A machine-learning engine will sit there and build connections, inferences and breadcrumbs as these executions happen, progressively learning and catching more and more indicators, biomarkers of metastasizing behavior.

Bank size doesn’t matter when it comes to a trafficker’s money laundering. It’s not just the mega institutions that are affected. Often the smallest banks are targeted by traffickers because of the poor technology and low budgets forced on the financial crime teams. And these traffickers understand EXACTLY what a regulator or internal auditor looks for. We should not kid ourselves that getting a regulatory “attaboy” is doing anything to stop the crimes we are all focused on stamping out. These criminals often have relationships with other local businesses that are banking at the same institutions.

We have to work together

Being creative with our technological tools will help. Huge investments in data homogenization, breakthroughs in AI and machine-learning detection algorithms and increasing adoption of cloud computing is making the TCO (Total Cost of Ownership) of world-class detection and interdiction affordable for any budget. But this alone won’t solve the problem. Criminals exploit the system, not individual components. I have no idea why this is so slow to accept.

We have to work as a collective system and in conjunction with various branches of law enforcement to make an even bigger impact on human trafficking. Too often, financial institutions see such work through a competitive lens. Sharing information is critical. As a result, the National Cyber-Forensics and Training Alliance (NCFTA), established as an FBI division, “has become an international model for bringing together law enforcement, private industry, and academia to share information to stop emerging cyber threats and mitigate existing ones.” Similar progress internationally – in Canada and Holland – is showing promising signs of cooperation and coordination against impressively nimble and creative adversaries.

I was honored to share a webinar stage recently with Ian Mitchell, founder of The Knoble, a non-profit network of financial crime experts “passionately fighting human crime.” Ian was especially enthusiastic about the need for such cooperation:

“We need to do a better job of sharing information and working together. And I think law enforcement is just as hungry for banks to help them as we are for law enforcement to help us. We are starting to really work together with the different branches of law enforcement globally to try to understand and prime the pump when it comes to putting together better detection tools.”

He also cited the need for banks to better interact not only with federal law enforcement, but also with state and local authorities who want to get involved but don’t know what questions to ask but are eager to learn what data may be available to them.

A global problem that touches home

There is more slavery in the world today than any other time in human history. That’s a fact. It’s also a fact that we have institutionalized it into our economic model – the dirty side of globalization. But despite this, there are parts of it that we all can stop. The sex trade and human exploitation trade specifically – the most profitable, most heinous and also, hopefully, the one that we can collectively agree we want to stop.

Human trafficking is not something remote. It touches us every single day, and anyone with daughters should be aware of how social media is becoming the primary tool for identifying, grooming and hooking young girls in the West. But we have the ability to put a stranglehold on the dregs of society who commit these crimes. As both individuals and organizations, we must think outside the box and be creative with the tools we have available. We’ve already proven it’s not a technical challenge any more. It’s a cultural one.

Every financial institution must know the red flags. FinCen has made a decent start by having published a list of “Behavioral and Financial Red Flag Indicators of Human Trafficking,” which needs to be a staple of every investigator’s library. It should be noted that this document has also been downloaded by every organized trafficker in the world. So, we need to be individually creative, uniformly cooperative and as nimble as those who seek to exploit us. Every bank, every FinTech, every VASP large or small owes it to itself and to society as a whole to investigate technologies that enhance these red flags and maybe not stop human traffic money launders dead in their tracks, but at least start making a difference.