Human trafficking is an enormous problem that, in addition to the human toll, generates $38 billion per year in revenue for criminals.
We spoke to Micah Willbrand, anti-money laundering and financial crimes expert with NICE Actimize—a provider of compliance and risk management products and services to the financial services industry—about the financial patterns that can uncover human trafficking activity and what role banks should play.
In Willbrand’s view, financial institutions can be instrumental in detecting and stopping human trafficking and spotting telltale financial patterns is an essential component in that effort. Financial institutions should be on the lookout for common red flags associated with the crime.
Has any major bank faced an enforcement action that directly referenced human trafficking?
I don’t think there has been a financial institution that has been fined … yet. I definitely do think that in the future they could be implicated, because there are specific red flags that identify human trafficking and smuggling activity. It is not something they cannot actively look for.
Human trafficking is often related to other crimes, so there is a high correlation between filing a Suspicious Activity Report on one activity and there being a human trafficking or smuggling abuse tied to it.
Oftentimes, it is just a matter of looking at your SARs. Do they include groups of 18- to 24-year-old women sending money to Bulgaria? If they do, there may be some money laundering with a human trafficking element.
Banks keep pleading that they don’t have enough time or sufficient resources, but there are a lot of technical things they can do to help.
Some of the ways they may be able to help the effort may not entail reinventing the wheel, so much as knowing what to do with the data they already possess and collect. What are some of the patterns to be on the lookout for?
A pattern you might see, for example, is a hotel that is processing a lot of cash. That is not indicative of a typical hotel as most process mostly credit card transactions. Financial institutions should file a SAR file on hotels that process large amounts of cash transactions as part of their investigatory processes.
What often comes out of that is these hotels are covering up brothels and prostitution rings. There is a lot of evidence out there if you take the next step and see whether you have any customers that list that hotel as an address. Is there something else that could be associated with it? That’s one, relatively easy screen that can be done with a transaction monitoring process.
Another red flag is if there are individuals escorting five or six people to deposit money. You often see that with human smuggling and trafficking. It might be a pimp bringing in workers, or even workers in debt bondage from India or the Middle East.
You have a transaction monitoring element, but you also have customer due diligence. It could be as simple as asking tellers whether they see suspicious activities among people coming into the branches. They are often able to spot that quickly.
Those are easy things to look for and a lot of them deal with demographics and geography.
As you might imagine, people from the East flow into the West. Also, if you are seeing money transfers from young individuals with clustered addresses, sending money back “home” in small increments to get around cash transaction reporting or SAR reporting levels, that needs to be flagged.
This definitely seems to connect to traditional due diligence where a bank might be suspicious of account inflows that don’t quite match up with the business or the expected income it can generate, or large cash deposits connected to businesses that don’t normally make them.
Existing due diligence procedures can probably detect a lot of human trafficking red flags.
The nice thing for banks, just to be realistic here, is that, as I said, I don’t think a regulator is going to go in and fine a bank anything time soon specifically for human trafficking. So, this is one of the few examples where banks get on the positive side of public relations. The data they have could help make a difference. If a bank can come out and say that it helped stopped human trafficking funds being transferred, that is a good bit of publicity for them.
ABOUT MICAH WILLBRAND
Micah Willbrand is an anti-money laundering and financial crimes expert with NICE Actimize, a provider of compliance and risk management products and services to the financial services industry.
He has more than 14 years of experience in financial services, retail, gaming, and technology specific to global AML/CFT initiatives, and brings a wide range of experience to enable organizations to streamline customer onboarding and monitoring programs.
Prior to joining Actimize, Willbrand was Global Director of Risk at Reed Elsevier-Accuity, where he also held the positions of director of risk & payments, EMEA and director, financial services americas.
It could also help shift banks from a defensive mode to an offensive one, regulatory speaking.
They do get it, but are often stuck in the weeds with all the other things they have to do. I think a lot of this will have to come down from the top, with a plan to cordon off 5 percent of the staff to focus on just this for a month and see what they find. I think we will start to see the turn here soon of financial institutions being more proactive on social issues.
Part of it comes down to a training perspective, specifically on the customer-facing end of the business and those employees.
I don’t believe a lot of training programs have focused on clues that bank tellers should be looking for. Formalizing it as part of a formal training process would be a relatively easy thing to do. What’s uncovered is, many times, just a bank teller who gets a feeling in their guy that something is not right.
Another thing banks can do is have something like a “hack-a-thon.” Maybe sponsor a day or two where teams start on the SARs that have already been filed and run a couple of technologies against them to see if they find, or can add, additional information and work with law enforcement to see if they spot anything.
I was at a conference last year, and a representative from Europol said that’s how they broke up a major, illegal brothel in Belgium. They went into a bank and asked for all of its transactions for 18- to 24-year-old women in this particular city that were sending money to Moldova, Romania, and Bulgaria. They noticed a cluster from a similar address and busted a brothel with 40 women who were trafficked there illegally.
It is a little bit like whack-a-mole, but it is very simple to do a lot of these things. Proactively looking at funds that might be processed illegally is probably a scary thing to do, but I think everyone is on the same page that this is not an activity anyone wants to support.