Financial Services Industry Recommendations

The following is an overview of the recommendations for the financial services industry discussed in the new report from Polaris, On-Ramps, Intersections, and Exit Routes: A Roadmap for Systems and Industries to Prevent and Disrupt Human Trafficking. This topic was included in the financial services chapter of the report.

For Financial Institutions

1. Continue efforts to refine anti-money laundering techniques to address variations across trafficking types.

   • Traffickers evolve so the models and systems built to detect their activities must change as well. For example, the rise of cryptocurrencies and the seizure of Backpage.com, both have had serious impacts to the ways in which financial institutions monitor transactions.

   • Financial institutions should develop collaborative relationships with NGOS, survivor leaders, law enforcement, and FinCEN focused on educating financial institutions about trafficking operations and how these activities may manifest in financial records.

2. Leverage investment and lending systems to address slavery.

   • Financial institutions have the ability to prevent trafficking through investment and lending transactions.

   • Good practice would require clients in high risk sectors to take proactive measures to mitigate risks through their investment terms.

   • Private equity firms, mutual funds and investment banks should be more involved in anti-human trafficking efforts.

3. Assist survivors in rebuilding their economic portfolio.

   • Financial institutions can reconsider certain discretionary policies that may unintentionally keep survivors from accessing critical financial resources. Some examples are:

     • Create account qualification exception programs for identified survivors of trafficking who provide documentation from service provider or law enforcement.

     • Offer low-to-no fee second chance accounts to survivors.

     • Accept addresses provided through a state’s official Address Confidentiality Program (ACP).

   • Establish partnerships with local anti-trafficking  service providers that assist survivors, including providing credit building micro loans or other financial assistance programs and providing free financial counseling or financial literacy courses to survivors and advocates.

4. Train customer-facing staff and make the National Human Trafficking Hotline number publicly accessible

   • Train customer facing staff to identify red flags associated with trafficking, document these observations, and follow established reporting processes.

   • This is especially crucial for check cashing counters and money transmitter services, since many at-risk migrant workers come into contact with these services weekly.

   • Businesses already post information for customers on how to identify fraud when they send money. It is also important to have similar warning signs about fraudulent recruitment, labor trafficking, migrant workers’ rights, and how and why to contact the National Hotline.

For the Public Sector

1. Pass legislation for transparency of beneficial ownership

   • Polaris supports passage of federal legislation requiring all businesses registering in the United States to disclose the business’ “beneficial owner”, which is the person or persons profiting from the business.
   • A government entity should collect and have the ability to give information to law enforcement if needed.

2. Pass legislation to provide safe harbor to facilitate information sharing between civil society and financial institutions.

   • There are currently no legal protections available to NGOs for sharing critical data that may assist in the detection, deterrence, or prevention of trafficking to financial institutions.
   • If leads from NGOs could be provided to financial institutions, this could lead to more relevant and actionable information for law enforcement.
   • The first step is passing legislation that protects NGOs from liability to share and exchange information with financial institutions.

3. Increase resources to relevant government agencies.

   • Technological investments in agencies like FinCEN could allow more data sharing between law enforcement and financial institutions and refine financial institutions’ monitoring and investigation efforts.
   • For example: Creating a system which automatically records information about which suspicious activity reports (SAR’s) were returned in proactive law enforcement queries for bad actors law enforcement became aware of through other channels. This data could be used to create models to predict which SARs are likely to prompt more action from LE.

4. Eliminate institutional barriers to pursuing financial crime investigations in concert with traditional trafficking investigations.

   • Financial crime charges carry significant penalties and can put traffickers out of business for good. Because evidence of such crimes typically exists in financial records, these charges usually do not rely on victim testimony, sparing victims from unnecessary retraumatization.
   • It’s important for there to be educational training to law enforcement on how to effectively pursue financial crimes within human trafficking cases and the FinCEN resources available to them.
   • Collaboration between law enforcement specialities is also crucial, since financial crimes and human trafficking are often handled by different departments within law enforcement agencies. One solution could be to include a financial analyst on the jurisdiction’s human trafficking task force.