Human Trafficking and Money Laundering: From a Survivor’s Perspective

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As part of our compliance webinar series, we recently were fortunate enough to host a live webinar with human trafficking survivor, author, speaker and social advocate, Timea Nagy. Unlike most of our webinars, due to the sensitive nature of the discussion, we will not be sharing video or slides from the event. 

 

We feel that the amazing insights shared by Ms. Nagy on human trafficking and money laundering is vital information for compliance professionals to understand the importance of compliance. The following article takes a look at human trafficking, with a focus on domestic sex trafficking, from both an AML perspective and from the perspective of survivors in the hopes to increase awareness and provide information to better detect instances of human trafficking.

 

What is Human Trafficking?

 

Human trafficking is the recruitment, transportation, transfer, harboring or receipt of people through force, fraud or deception, with the aim of exploiting them for profit.1 The human trafficking industry is estimated to be a $150 billion-a-year industry, with an estimated 50 million victims currently being trafficked. 

 

This $150 billion industry is driven by greed, taking advantage of victims who are normally already in a state of desperation. Human traffickers target specific populations, such as war refugees, poverty-stricken areas and victims of natural disasters. Traffickers also target individuals who are emotionally and/or financially vulnerable

 

Typologies

 

There are five main typologies of human trafficking. These are:

 

  • Digital sex trafficking
  • Physical foreign sex trafficking
  • Physical domestic sex trafficking
  • Forced labor
  • Organ trafficking

 

 

The Individuals and Organizations Behind Domestic Sex Trafficking

 

Human trafficking is usually made up of four main groups:

 

  • The actual traffickers 
  • The victims
  • The buyers
  • The facilities and existing legitimate businesses where buyers go

 

 

The Key Players Behind Domestic Sex Trafficking

 

Within these four groups are the key players without whom these crimes would not be possible. These individuals are not necessarily all different people; however, one or more individuals fill each of these roles within the domestic sex trafficking ring:

 

  • The victim
  • The trafficker
  • The driver and handler
  • The recruiter
  • The ‘Top Girl’
    • Normally the trafficker’s first victim who tries to assist the trafficker in controlling the other victims
  • The intimidator

 

The Tools Used in Sex Trafficking

It’s important to understand what tools and technology are used in human trafficking to be able to know what to monitor and how to better detect red flags and instances of sex trafficking. The main tools used are:

 

  • Phones
  • Social Media Accounts
  • Driver’s licenses, vehicles and forms of transportation
  • Hosting spaces for clients (facilities and existing legitimate businesses)
  • Email accounts
  • Bank accounts
  • Online payment accounts
  • Frequent purchases of drugstore items

 

 

Where Sex Trafficking Takes Place

It’s also vital to understand the businesses where sex trafficking takes place to be able to detect suspicious transactions and actions. It is very common for sex trafficking to occur in:

 

  • Traveling/Circuit Style Locations
    • Victims being moved from hotel to hotel
  • Local 
    • Local hotels and businesses
  • Massage parlors
  • Strip joints

 

Identifying Traffickers

Identifying traffickers can be difficult. In many cases traffickers can be married, with both spouses having legitimate jobs or businesses. They can have direct contact with their victims or have hired drivers and handlers. 

 

The following statistics provide estimates based on real sex trafficking cases and rings and can be used to detect future trafficking rings.

 

The Numbers Behind Sex Trafficking

These numbers are averages and can vary case by case. They are vital to understand, as they can help with detecting and monitoring suspected trafficking rings. 

 

  • Working 7 days a week with 20 hour work days
  • $50-$80 per call
  • 15 clients per day
  • $8,400 per week
  • Traveling to 1.5 cities per week
  • Traveling to 5 different cities in a month
  • Traveling to 30-65 cites in a year

 

Profiting from Trafficked Victims

Avg. Monthly Income Per Victim: $33,600

Avg. Monthly Expenses: $6,048

  • Escort Ads: $840
  • Hotels: $1,440
  • Condoms: $168
  • Transportation: $1,000
  • Food: $600
  • Handler: $2,000

Net Profit for trafficker: $27,552

 

Sex Traffickers Financial Red Flags
  • 90% are American or Canadian
  • Sudden changes to transactions and/or lifestyles
    • Men’s clothing
    • Video games
    • Fine dining
    • Frequent hotel purchases
    • Frequent cash deposits and withdrawals
    • Money transfers
  • Sudden change to account balance/income
  • Frequent traveling
  • Erratic spending habits
  • Purchasing of escort ads

 

Sex Trafficking Victim Financial Red Flags
  • 90% are American or Canadian
  • Sudden changes to transactions and/or lifestyles
    • Hotels and Airbnbs
    • Travel expenses
    • Website ads
    • Frequent cash deposits and withdrawals
    • Money transfers
    • Fast-food
    • Nail and tanning salons
  • Sudden change to account balance/income
  • Frequent travelling
  • Erratic spending habits
  • Failing loan payments
  • Bank account is frequently negative
  • Purchasing of escort ads

 

Crimes That Go Hand-In-Hand with Sex Trafficking

In many instances sex trafficking is not the only financial crime taking place in these criminal organizations. It is very common to see the following financial crimes taking place, all of which can be indicators that sex trafficking may also be taking place:

 

  • Identity Theft
  • Credit/Debit Fraud
  • Retail Fraud
  • Retail Theft
  • Check Fraud
  • Loan Fraud

 

Independent Sex Worker vs. Domestic Sex Trafficking Victim

There are of course other individuals working in the sex industry of their own accord. While they’re may be certain similarities between accounts and transactions, it is usually very easy to tell them apart with financial data.

 

Certain transactions and travel habits can point to sex trafficking, however a more effective way of discerning between independent sex workers and human trafficking rings can be through the transactions and habits that are not occurring in these accounts.

 

In many sex trafficking accounts you won’t see the following transactions being made:

  • Grocery store purchases
  • Mortgage/rent
  • Appliances, furniture and household items
  • Expenditures on hobby related activities
  • Regular doctor and dentist visits

 

These types of transactions indicate a regular life of an individual who works of their own accord and has access to all of their income.

 

Tools for Identifying Human Trafficking and Money Laundering

While these patterns and numbers are important to understand, financial institutions need sophisticated tools in order to monitor transactions and accounts and notify compliance teams of suspicious activities.

 

Real-time transaction monitoring can detect suspicious transaction patterns of money laundering and human trafficking through legitimate financial institutions. To implement a real-time AML transaction monitoring solution for your business, contact us today.

 

For more information on human trafficking awareness and prevention, please visit Timea Nagy’s website.

 

 

 

Sources:

 

1https://www.unodc.org/unodc/en/human-Trafficking/Human-Trafficking.html

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