Fighting Human Trafficking with Compliance Technology and New Legislation

In recent years, modern slavery, specifically in the form of human trafficking, has become an egregious issue within the United States (US) as well as internationally.  While many think of slavery as a relic of history, unfortunately, global statistics show otherwise.  The 2016 Global Slavery Index, an annual ranking of slavery conditions by countries worldwide, estimates that 46 million people are subject to some form of modern slavery in the world today.  In corporations, human trafficking can occur both in employment and supply chains.

Moreover, there has been a reported growing linkage between human trafficking and corruption.  Prior to globalization, companies tended to source products locally, paying local taxes and relying on the government to enforce labor rights and laws.  However, while companies have increasingly sought lower priced inputs direct from lower cost countries, brand awareness and consumer expectations of brands have increased.  Unfortunately, national governments in some low cost countries cannot be relied upon to enforce their own laws and meet the expectations of consumers of respected brands.  Thus, it is becoming increasingly arduous for those brands to undertake their own assurance of basic human rights – resulting in human trafficking.  Furthermore, government officials of countries with high levels of corruption may participate in furthering trafficking efforts, including the transportation, recruitment and exploitation of trafficked workers.

The use of risk assessments and due diligence procedures, cross-border collaboration and information sharing, and the transaction monitoring techniques that identify suspicious activity and accounts can help identify where trafficking is present.  Such compliance tools disrupt the flow of money that may be used or transferred through trafficking activities.  Moreover, new compliance technology has been created and used in financial institutions (FI’s) to tackle this issue along with an expansion in personnel training to ensure responsibilities in compliance are properly taken care of.  Both the new and traditional compliance tools play a role in daily compliance-related activities to report unusual accounts and seize the assets to stop the inhumane and abominable act of human trafficking both domestically and abroad.

With respect to legislative efforts in the US, Elizabeth Warren and Marco Rubio (US Senators) together presented a new legislative bill to Congress in an effort to aid FI’s with identification and reporting of human trafficking cases.  This proposed bill adopted by Senator Warren and Rubio was coined “The End Banking for Human Traffickers Act.”  According to Warren, the bill will “direct federal banking regulators to work with law enforcement and financial institutions to combat the use of the financial systems for human trafficking.”  This bill will also help to encourage the use of compliance technology in order to alert FI’s when there is suspicion of human trafficking, meaning that FI’s will play a large role in combating human trafficking because of enhanced anti-money laundering (AML) preventative and precautionary actions.

In addition to adopting new legislation to help victims of human trafficking, the US Financial Crimes Enforcement Network (FinCEN) issued guidance that may help highlight financial red flags that identify human trafficking activity.  For example, the guidance describes flagging “funnel accounts,” which involve a banking customer opening an account as a front for an illegal entity in order to allow illegal funds to be deposited.  In general, the transactions through “funnel accounts” are processed “under the cash transaction reporting (CTR) limit of $10,000 per banking day” (Grant Thornton, 2017).  Thus, by flagging such activity, FI’s can receive a prompt alert and immediately begin remediating the situation.

Human trafficking initiatives cannot stop with these precautionary and preventionary tools identified by governmental bodies as it continues to be a serious issue that yields criminal syndicates approximately $150.2 billion dollars annually, with an estimated 20 to 45 million people currently being denied their basic human rights, freedom, integrity, and livelihood through this inhumane and barbaric illegal industry.  As a society, we must work together and use every available resource to ensure that human trafficking comes to an end.  Modern day slavery is thriving and it is up to us to stop it. 


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