Newly released guidance from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) warns financial institutions about the warning signs and suspicious activities that may indicate human smuggling and trafficking and how to report those discoveries.
“Financial institutions, large and small, can play a critical role in identifying and reporting transactions related to these unlawful activities based on their observations when interacting with customers and their monitoring processes,” FinCEN says.
Among the suspicious customer activities detailed in the guidance as warning signs of human smuggling or trafficking:
Multiple wire transfers, generally kept below the $3,000 reporting threshold, sent from various locations across the United States to a common beneficiary located in a U.S or Mexican city along the Southwest Border.
Multiple wire transfers conducted at different branches of a financial institution to or from U.S or Mexican cities along the Southwest Border on the same or consecutive days.
Wire transfers that originate from countries with high migrant populations (Mexico, Guatemala, El Salvador, Honduras) and are directed to beneficiaries located in a U.S or Mexican city along the Southwest Border.
Beneficiaries receiving wire transfers from countries with high migrant populations who are not nationals of those countries.
Unusual currency deposits into U.S. financial institutions, followed by wire transfers to countries with high migrant populations in a manner that is inconsistent with expected customer activity. This may include sudden increases in cash deposits, rapid turnover of funds, and large volumes of cash deposits with unknown sources of funds.
Multiple, apparently unrelated, customers sending wire transfers to the same beneficiary, who may be located in a U.S or Mexican city along the Southwest Border.
A customer’s account appears to function as a funnel account, where cash deposits (often kept below the $10,000 reporting threshold) occur in cities/states where the customer does not reside or conduct business. Frequently, in the case of funnel accounts, the funds are quickly withdrawn (same day) after deposits are made.
Checks deposited from a possible funnel account appear to be pre-signed, bearing different handwriting in the signature and payee fields.
Frequent exchange of small-denomination for larger denomination bills by a customer who is not in a cash intensive industry. This type of activity may occur as smugglers ready proceeds for bulk cash shipments.
A business customer does not exhibit normal payroll expenditures (wages, payroll taxes, social security contributions). Payroll costs can be non-existent or extremely low for the size of the customer’s alleged operations, workforce and/or business..
A customer with a business that deducts large amounts from the wages of its employees alleging extensive charges (housing and food costs), where the employees only receive a small fraction of their wages.
Cashing of payroll checks where the majority of the funds are kept by the employer or are deposited back into the employer’s account. This activity may be detected by those financial institutions that have access to paystubs and other payroll records.
Cash deposits or wire transfers are kept below $3,000 or $10,000 in apparent efforts to avoid record keeping requirements or the filing of Currency Transaction Reports.
Frequent outbound wire transfers, with no business or apparent lawful purpose, directed to countries at higher risk for human trafficking or to countries that are inconsistent with the customer’s expected activity.
Multiple, apparently unrelated, customers sending wire transfers to the same beneficiary.
Transactions conducted by individuals, escorted by a third party (under the pretext of requiring an interpreter), to transfer funds (that may seem to be their salaries) to other countries.
Frequent payments to online escort services for advertising, including small posting fees to companies of online classifieds as well as more expensive, higher-end advertising and website hosting companies.
Frequent transactions, inconsistent with expected activity and line of business, carried out by a business customer in apparent efforts to provide sustenance to individuals (payment for housing, lodging, regular vehicle rentals, purchases of large amounts of food).
Payments to employment or student recruitment agencies that are not licensed/registered or have labor violations.
When filing SARs to indicate potential cases, FinCEN advises that the reports include the key terms, “Advisory Human Smuggling” and “Advisory Human Trafficking.” The narrative should include an explanation of why the institution knows or suspects, or has reason to suspect that the activity is suspicious. A potential victim of human smuggling or trafficking should not be reported as the subject of the SAR. Rather, all available information on the victim should be included in the narrative portion.