Anti-Money Laundering News and Information

FinCEN: Human Trafficking Red Flag Indicators

WHAT IS HUMAN TRAFFICKING?

Human Trafficking is captivation of men, women and children through a process of channel and networking towards the illicit economy. Women and Children become vulnerable towards sex slavery and child labours, while men are involved in other crimes, such as drugs, violence, rapes, etc.

“While we are far from ending impunity, we have made headway in the 15 years since the Protocol against Trafficking in Persons entered into force,” said UNODC’s chief Mr. Fedotov, as he noted that “nearly every country now has legislation in place criminalizing human trafficking”.

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THE PROCESS EXPLAINED

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FINCEN ADVISORY ON HUMAN TRAFFICKING

On 15th October 2020, The Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions to effectively implement counter measures to prevent & report human trafficking .

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Financial institutions are advised to effectively monitor and understand from the typologies published in the advisory to help prevent heinous crimes such as Human trafficking. It is also imperative that financial institutions train customer facing staffs who can play a vital role in understanding behavioural indicators that may include human trafficking.

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ADVISORY OVERVIEW

The advisory explicitly includes an overview of human trafficking emerging trends, typologies, red flags, case studies and other key behavioural indicators. It worth mentioning that FinCEN requests that financial institutions include the key term “HUMAN TRAFFICKING FIN-2020-A008” in SAR field 2 (Filing Institution Note to FinCEN) to indicate a connection between the suspicious activity being reported and the activities highlighted in the advisory.

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TYPOLOGIES OF HUMAN TRAFFICKING

Human traffickers adopt different mechanisms to evade detection & hide their illicit process. Of course, this is not the end, the traffickers adopt different techniques to bypass CDD measures or suspicions in different stages of money laundering.

The advisory explicitly mentioned 4 new typologies which are 1. Front companies 2. Exploitative employment practice 3. Funnel Accounts & 4. alternative payment methods.

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RED FLAGS OF HUMAN TRAFFICKING

To help identify and report transactions possibly associated with human trafficking, FinCEN
has identified 10 new financial red flag indicators.

These red flags do not replace the red flags identified in the 2014 Advisory.

  1. A third party speaks on behalf of the customer (a third party may insist on being present and/ or translating).
  2. A third party insists on being present for every aspect of the transaction.
  3. A third party attempts to fill out paperwork without consulting the customer.
  4. A third party maintains possession and/or control of all documents or money.
  5. A third party claims to be related to the customer, but does not know critical details.
  6. A prospective customer uses, or attempts to use, third-party identification (of someone who is not present) to open an account.
  7. A third party attempts to open an account for an unqualified minor.
  8. A third party commits acts of physical aggression or intimidation toward the customer.
  9. A customer shows signs of poor hygiene, malnourishment, fatigue, signs of physical and/or sexual abuse, physical restraint, confinement, or torture.
  10. A customer shows lack of knowledge of their whereabouts, cannot clarify where they live or where they are staying, or provides scripted, confusing, or inconsistent stories in response to inquiry.

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To read full advisory please click Here

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Published on The Crimebuster

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