A version of this article originally appeared in the ABA Banking Journal's Risk and Compliance January/February 2020 edition.
Human trafficking: Closer to home than you think
January 16, 2025
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This article covers these key topics:
Human trafficking is a global problem that affects us all
Many Americans believe human trafficking only happens in developing countries. But this $150 billion industry is closer to home than you might think.
January is Human Trafficking Awareness Month
January marks National Slavery and Human Trafficking Prevention Month, also known as Human Trafficking Awareness Month. Human trafficking involves the use of force, fraud, or coercion to entrap individuals in the form of labor trafficking or sex trafficking. While this topic is undeniably dark and challenging, financial institutions are in a unique position to understand and fight human trafficking.
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Get detailsWhat is human trafficking?
According to the U.S. Department of Homeland Security, traffickers use violence, fraud, manipulation, romantic relationships, or false promises of well-paying jobs to lure victims into some labor or commercial sex trade. The U.S. Department of State estimates that there are currently 27.6 million victims of human trafficking around the world, 77% subjected to forced labor and 23% to sex trafficking.
While human trafficking may sound like a third-world problem, you may be surprised to learn it is much closer to home than you think. Within the United States, human trafficking is widely unreported for a variety of reasons, including fear or immigration status. According to a survey conducted by the Global Slavery Index, there are an estimated one million persons trafficked here at any one time. You could be encountering human trafficking in your community—no matter where you live or the size of your financial institution.
The Department of Homeland Security reports that many trafficking cases in the United States involve individuals working in sectors like agriculture, landscaping, construction, factories, domestic roles such as nannies or caregivers, restaurants, elder care, and massage parlors. These jobs often exist within the underground economy, characterized by low wages and minimal legal protections. Additionally, sex traffickers increasingly use online platforms to recruit and advertise victims, supplementing traditional venues like bars, massage parlors, street prostitution, and escort services.
Profits from human trafficking are estimated globally at $150 billion a year, much of which is flowing through the U.S. financial system. Nonprofit anti-trafficking organization Polaris reports, “While there are certainly some completely unbanked traffickers, a significant portion of that overwhelming sum passes through legitimate financial services businesses.”
Who are the victims?
In the United States, trafficking is not only common in large cities and Mexico border towns but also in the heartland and coastal regions. The National Human Trafficking Hotline and Polaris research show that:
- Agricultural communities are plagued with labor trafficking. Migrant workers are recruited to the U.S. on work visas and then charged illegal fees for their visas. When workers complain, they are abused and threatened with deportation, and they are unable to escape debt bondage.
- Substance use issues can be a reason for involvement in sexual exploitation for adults and minors, and men and women. Drug dealers will incite and coerce addictions so that their victims will begin and continue to engage in the commercial sex trade.
- “Grooming,” manipulating someone into a state of trust by buying gifts and expressing romantic intentions, is a common way to lure young victims into sex trafficking. Minors from unstable family homes, those who were abused at a young age, and those in foster care can be particularly vulnerable to these types of traffickers.
Those who are especially vulnerable to human trafficking are:
- In need of social safety nets
- Impoverished or homeless
- From areas of instability or armed conflict
- In the U.S. illegally or on temporary work visas
Citing a report by the National Domestic Workers Alliance, Polaris says victims of labor trafficking in domestic work can pay between $3,000 and $9,000 in recruitment fees, resulting in many foreign workers arriving for their first day of work already deeply indebted to their employer or recruiter.
Debt and immigration status (legal or illegal) not only keep the workers trapped but also silent and sometimes ashamed, afraid of deportation. “There are people from where I come from who have sold their only piece of land just to buy a ticket to come here, thinking that they will make money and better their lives. If they have been duped, how and where do they go back to?” asked one trafficking survivor in the Polaris report.
Victims of labor trafficking can pay between $3,000 and $9,000 in recruitment fees, causing many foreign workers to be deeply indebted to their employer or recruiter on their first day of work.
What industries are most likely to harbor traffickers?
For financial institutions to help detect human trafficking, it is essential not only to understand how victims become victims but also to understand who the traffickers are. By analyzing the U.S. human trafficking hotline information, Polaris identified 25 distinct types of human trafficking business models occurring in the U.S. The more common typologies within our borders are:
Sex trafficking
- Escort services: Commercial sex acts that primarily occur at temporary indoor locations and include hotel-based operations, internet ads, and out-calls to buyers.
- Residential sex trafficking: Call-in commercial sex occurring at a non-commercial residential location.
- Illicit massage businesses: The primary business of sex and labor trafficking is concealed under the facade of legitimate spa services.
- Outdoor solicitation: Potential victims are forced to find commercial sex buyers in outdoor locations such as on “tracks,” "strolls,” or at truck stops.
- Pornography: Pre-recorded sexually explicit videos and images, including child pornography. This can include informally distributed pornographic material or commercial sex through a formal pornography company.
Labor trafficking
- Agriculture and animal husbandry: A farming business in which potential victims are exploited for their labor in growing/maintaining crops, cultivating soil, or rearing animals.
- Domestic work: Where an individual works for one specific household/family providing personal household tasks, cleaning, childcare, or adult caretaking, often living on-site with the family.
- Construction: Potential victims are exploited for their labor in carpentry, masonry, painting, roofing, etc.
- Restaurants and food service: Potential victims are exploited for their labor as servers, bussers, dishwashers, cooks, etc.
- Hospitality: Potential victims are exploited for their labor as hotel housekeepers, front desk attendants, bell staff, etc.
Victim indicators
Knowing the possible victim signs for those who may come into your financial institution is also essential, particularly for front-line staff. The DHS lists several indicators to be aware of, such as:
- Those accompanied by a controlling person or boss (e.g., not speaking on their own behalf)
- Lack of control over personal schedule, money, I.D., and travel documents
- Transported to or from work or lives and works in the same place
- Debt owed to employer/crew leader and inability to leave a job
- Bruises, depression, fear, or overly submissive behavior
- A juvenile engaged in commercial sex acts
What guidance should financial institutions follow?
Human traffickers go to great lengths to keep their victims in the shadows, so it is possible that trafficking may never be visible in plain sight. However, financial institution staff are in a unique position to observe customers when interacting with them and to detect and report suspicious financial activity that might be related to human trafficking. In addition, there are specific transaction indicators that AML professionals can monitor and report.
In 2014, the Financial Crimes Enforcement Network issued advisory FIN-2014-A008, providing ways for financial institutions to identify possible human trafficking. This advisory should be used for your AML policies and procedures, as well as for training and customization of your AML monitoring system, which can detect critical red flags.
Proper transaction monitoring systems will alert on typologies and red flags. A financial institution’s AML software should also detect keywords to locate transactions such as RedBox, travel agencies, airline tickets, lingerie, and high-volume fast-food purchases. Many red flags, from victim indicators to transaction traits, may indicate human trafficking.
Transactional red flags include the following:
- Frequent movement through and from different geographic locations. Transactions may be combined with travel and transactions in and to foreign countries known for human trafficking
- Transactions inconsistent with a customer’s expected activity and/or line of business to cover trafficking victims’ living costs, including housing, transportation, medical expenses, clothing, grocery stores, and restaurants, especially fast-food eateries
- Transactional activity occurring outside of regular business operating hours, frequently made in cash, and larger than what is expected for the business
- Frequent cash deposits with no Automated Clearing House (ACH) payments
- Frequent purchases and use of prepaid access cards
- Account sharing common identifiers, such as a telephone number, email, social media handle, or address, associated with escort agency websites or commercial sex advertisements
- Frequent transactions with online classified sites that are based in foreign jurisdictions
- Frequently sending or receiving funds via cryptocurrency to or from darknet markets or services known to be associated with illicit activity
- Frequent transactions using third-party payment processors that conceal the originators and/ or beneficiaries of the transactions
- Transactions that avoid identification document requirements or that trigger reporting
While human trafficking typologies are sometimes complex for financial institutions to detect, it is possible. The dollar amounts may be lower than usual transaction monitoring thresholds, so you might consider lowering specific parameters, such as velocity and cash scenarios, to catch these lower transactional patterns. When filing suspicious activity reports (SARs) for suspected human trafficking, FinCEN asks that you add all pertinent information in the SAR narrative as to why you believe it might be human trafficking. A potential victim’s name should not be added as a subject of the SAR but, if known, should be added to the narrative. In addition, FinCEN requests that you use the key term “Human Trafficking FIN-2020-A008 in SAR field 2 (Filing Institution Note to FinCEN) as well as selecting the human trafficking box in SAR Field 38(h). After filing a SAR on suspected activity, notify the Department of Homeland Security at Tip Line 1-866-347-2423.
According to Polaris, one focus group survivor who made at least four separate deposits totaling over $5,000 into her recruiter’s account pleaded, “I wish [someone] would have asked what all that money was for.”
This highlights the importance of victim identification training for customer-facing bank staff. Fortunately, many financial institutions have recognized this and have increased training for customer-facing staff in recent years. Local law enforcement, both at the federal and state levels, can be a good source for free training for your financial institution. They are eager to partner with the financial sector to stop crime, and they can provide valuable insight into suspicious local activity.
A final way that financial institutions can assist in the fight against human trafficking is to help the survivors get their lives back on track with access to banking services. Victims often have ruined credit or no credit or recorded employment history and are unable to open a bank account. Polaris suggests that financial institutions may implement a “second chance” program for survivors of human trafficking. Typical second-chance programs have different account requirements, services, and fees. While such program features typically include low or no fees, they also have more restrictions than traditional accounts, such as limiting daily withdrawals. Offering second-chance accounts is one way some banks are helping survivors rebuild their lives and prevent further exploitation.
By reporting the detected information, financial institutions and FinCEN can ensure that law enforcement is aware of the activity, thereby preventing trafficking from happening, rescuing victims, and apprehending the perpetrators. Additional efforts by banks include training staff on human trafficking and even posting information in the bank about how human trafficking victims can get help. Polaris notes that many human trafficking victims, especially in rural areas, do not have regular contact with anyone other than their traffickers or others at job sites, except when visiting a financial services facility. One idea is to post information at the bank about how and why to contact the National Human Trafficking Hotline (888-373-7888 or text HELP or INFO to 233733 or “BeFree”).
Does your financial crime software alert you to potential human trafficking? It should.
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