Human Trafficking and the Financial Services Industry

Banks and credit card companies have designed effective and sophisticated systems for identifying potential human trafficking through patterns of payment, spending, deposits, travel and otherwise moving money. This is essential as most traffickers will utilize legitimate financial institutions in a variety of ways including using prepaid credit cards, making bank accounts in for victims or businesses, encouraging victims to transfer money using money remittance services to pay for recruitment fees, etc.

Financial Services in Recruitment

In labor trafficking, victims may be coerced to pay illegal recruitment fees to recruiters to guarantee their job in the United States. Many of these transactions are done using banks or money services businesses. Victims may even take out predatory loans with extreme interest or sell their only land in order to pay the fees for a job that will eventually trap them in debt. Even in sex trafficking, victims may pay recruitment fees for what they think are legitimate jobs at massage parlours, but that turn out to be jobs selling commercial sex. Some traffickers even take the credit of their victims into account when recruiting so they are able to use their victims’ credit to gain credit cards and bank accounts.


Financial Services in Trafficking Operations

The anti-money laundering community has made great strides in detecting trafficking in transactional monitoring, spending patterns, and other cutting edge technologies. Financial services are used in organized types of sex and labor trafficking such as illicit massage parlors, cantinas, and residential brothels, and each have their own distinct ways of managing and laundering money. Even un-networked sex traffickers will utilize financial services like cryptocurrency and prepaid credit cards to purchase commercial sex ads online. Labor trafficking business models can rely on all sectors of the finance industry from business loans to payroll systems. Traffickers also use economic abuse against victims, making it especially hard for victims to leave.

Financial Services for Victims & Survivors

A victim’s access to financial resources and services is often the single determining factor when faced with the decision to leave their situation and start over. It is critical that survivors have the ability to rebuild their credit and gain economic stability. In some cases, the trafficker has destroyed the victim’s credit or made purchases to commercial sex websites in the victim’s name, so the victim is unable to get a bank account or rebuild credit. Without credit, a victim may find it difficult to regain necessities such as safe housing, a new job, or even a cell phone which furthers the risk for re-exploitation. Bank tellers and money remittance services are also coming into direct contact with victims during their trafficking.

Financial Services Recommendations

This report has developed several recommendations for financial institutions including assisting survivors in rebuilding their economic portfolio by providing feasible access to financial services to help build credit, passing legislation to allow for transparency of corporate beneficial ownership, training customer facing staff to identify human trafficking, posting the National Human Trafficking Hotline number at banking and money remittance locations, and passing legislation that facilitates information sharing between NGOs and financial institutions on suspected trafficking while ensuring there is no liability for NGOs involved.