Human trafficking generates an estimated $236bn in illegal profits each year, with the proceeds often moving through financial channels that appear legitimate. For banks and other financial institutions, identifying exploitation can therefore depend on understanding the wider patterns behind seemingly routine financial activity.
Nearly 50 million people are living in modern slavery worldwide, including 27.6 million in forced labour, according to the International Labour Organization. While the scale of the crime is well established, tracing the money associated with it presents a different challenge.
For many victims, exploitation can begin with the promise of legitimate employment. Consilient chief commercial officer Laurence Hamilton said workers may pay recruitment fees, take on debt to secure a job and arrive at their destination owing money before they have earned a wage. Costs such as travel, accommodation and documentation can add to that debt, while earnings may subsequently be withheld, reduced or redirected.
This can turn normal financial activity into part of an exploitative system. A salary payment, a small transfer or a remittance does not necessarily appear suspicious on its own, even when it contributes to the ongoing extraction of money from an individual.
Debt bondage is one example of how that financial control can develop. Fees and other costs can build up, with repayments, penalties and deductions leaving workers dependent on those exploiting them. From a bank’s perspective, the resulting payments can still resemble normal financial behaviour.
That is particularly challenging when dealing with migrant workers, low-income customers or small businesses, where regular wages, remittances and relatively small transactions may be entirely expected.
The circumstances surrounding migration can also vary significantly. Some people move in search of work and only discover that the conditions differ from what they were promised. Others may experience coercion, have their documents retained or face restrictions on their movement. Economic vulnerability can further increase the risk of exploitation, particularly where recruitment arrangements are informal.
There is therefore unlikely to be a single transaction that definitively identifies trafficking. Instead, financial institutions may need to consider how activity develops across an account and its wider network.
Repeated payments, access to funds, connections between accounts and the movement of money between different locations can provide additional context. Looking at these relationships can help reveal patterns that are difficult to see from individual transactions.
The complexity increases because trafficking revenue can be divided between several participants. Recruiters, brokers, transporters, accommodation providers and those controlling working conditions may each take a share at different points in the process.
Money can consequently pass through victims’ accounts, third-party intermediaries or businesses. The person whose name appears on an account may not necessarily be the person controlling the funds, with access potentially determined by control of banking credentials or devices.
These fragmented flows can make detection harder. Payments may be low in value, repeated over long periods and distributed across different accounts or financial institutions. A series of ordinary-looking transactions can therefore become more significant when considered together.
Cross-border activity presents a similar challenge. Trafficking can follow established corridors, including movements between Southeast Asia and the Middle East and East Asia, Latin America and the US, and Eastern and Western Europe.
However, simply identifying a high-risk jurisdiction is not enough. The financial relationships connecting people, accounts and locations can offer a clearer picture of how money is moving through a network.
This means financial institutions may need to move beyond the question of whether a payment appears suspicious. The more important question can be what the wider pattern of activity says about the relationships behind it.
Consilient‘s Hamilton said no individual bank is likely to see every part of a trafficking network. Activity can be distributed between banks, payment providers, employers, recruiters and jurisdictions, leaving each institution with only part of the picture.
Connecting those fragmented signals through network-level intelligence could give financial institutions a better understanding of how trafficking proceeds move through the financial system. Banks cannot solve human trafficking on their own. But where exploitation is driven by financial gain, following the money can provide an important opportunity to disrupt the system that sustains it.
Read the Consilient analysis here
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