Finance is crucial to the operation of any major criminal enterprise, and human trafficking – the crime most rooted in human misery – is no exception.
Traffickers need to pay for their logistical networks and reinvest their profits, leaving financial footprints that make them vulnerable to capture. As criminals become increasingly adept at covering their financial tracks, there needs to be greater cooperation and sharing of insights among those working to root them out; namely banks, law enforcement agencies (LEAs), government bodies and non-governmental organisations (NGOs).
The scale of the problem
Over 40 million people are enslaved around the world, according to the Global Slavery Index. The Index, developed jointly by human rights group Walk Free Foundation and the UN’s International Labour Organization, is considered the most credible current estimate of modern slavery, an umbrella term that covers “situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, abuse of power, or deception.”
The 40.3 million figure includes an estimated 15.4 million victims of forced marriage, with the remaining 24.9 million comprising forced labourers, of which 4.8 million were in forced sexual exploitation, 4.1 million in forced labour imposed by the state and the remaining 16 million employed in the private economy across a wide range of industries, including manufacturing, construction, agriculture, fishery, mining and hospitality.
“The criminal component of that generates USD150 billion annually for people who are involved in the trafficking and exploitation of those people,” says Nick Lewis, Standard Chartered Bank’s Global Head, Integrated Intelligence and Investigations (i3).
“And that’s just trafficking,” stresses Peter Barnes, the Bank’s Head of Financial Crime Investigations. “If you wanted to look at profits from human smuggling [which refers to immigration crime, whereby people pay criminal organisations to illegally transport them from one country to another], then you are probably looking at another USD60 billion on top of that. Collectively, it is probably the third biggest criminal industry in the world.”
“The most sinister component of this is that children and vulnerable adults are exploited as well,” adds Lewis. “And sadly, we see in many countries around the world far too many cases of children exploited for sexual purposes.”
Increasing risk to supply chains
Trafficked labour is also believed to make up a significant amount of supposedly legitimate global trade. According to the Global Slavery Index, an estimated USD354 billion worth of products imported by G20 countries each year are at risk of having slave labour in their supply chains.
The increasing complexity and interconnectedness of supply chains has heightened the risk of exposure to forced labour. Multinationals cannot turn a blind eye to the issue: apart from being deterred by the horrors of the crime itself, corporations face criminal liability for failing to ensure their supply chains are free from any form of exploitation.
Stepping up detection of financial crime
Tackling the financial flows generated by organised criminal enterprises that directly harm hundreds of millions of people is a crucial step to stopping slavery. Unfortunately, detecting financial crime is enormously challenging, with the United Nations Office on Drugs and Crime estimating in 2011 that less than one per cent of criminal funds flowing through the international financial system every year is frozen and confiscated by law enforcement – a proportion that has yet to be significantly improved upon.
The answer lies in a more collaborative approach. One of the most established alliances is the Joint Money Laundering Intelligence Taskforce (JMLIT)5, set up in 2016 to create a partnership between the UK government, LEAs and more than 40 major UK and international banks. Standard Chartered is involved in similar taskforces around the world, which leverage the power of partnerships to tackle illicit financial flows associated with the trade.
JMLIT’s Expert Working Group on human trafficking and organised immigration crime is headed by Peter Barnes. “JMLIT brings together a number of different law enforcement agencies that have an interest in investigating human trafficking both within the UK and internationally within the financial sector so we can discuss real live cases, share best practices from other institutions, and really start to understand the detail of the criminal finance behind the trafficking network,” he explains. Before JMLIT, any similar attempts took place bilaterally, with each bank doing its own work in isolation.
JMLIT has opened a communication channel between the banks and LEAs, that allows the banks to focus their attention on matters of interest to LEAs. Through reviewing live cases in detail, it has raised awareness across the financial sector.
Sharing vital intelligence
Another important role of JMLIT is to help law enforcement understand the wealth of intelligence available to them through the financial sector. “The traditional law enforcement request to a financial institution was based on the belief that everything to do with a bank went through a retail account,” explains Lewis. “There was very little understanding that actually there were a plethora of financial products and services beyond that, all of which have an intelligence value when you’re trying to dismantle an organised crime group.”
To move a commodity from one place to another needs logistics, transport and communication, Lewis explains. “These are all usually outwardly legitimate or partly legitimate, but they are exploited and abused for criminal purposes. A legitimate transport network will have a financial footprint. It will have vehicles. Those vehicles will be bought, they will be serviced, they will be fuelled. There will be customs fees to pay, there will be bills of lading. There will be letters of credit sitting behind maritime shipments from one continent to another.”
“Helping law enforcement really understand the whole range of intelligence that is available – if they know what to ask for – has been one of the key successes of [Standard Chartered’s] work in JMLIT. And we’re beginning to see an increased sophistication in the requests that we get from law enforcement as their understanding of the financial sector improves.”
In terms of operational outcomes, between May 2016 and March 2017, JMLIT contributed to 63 arrests of individuals suspected of money laundering and the closure of more than 450 bank accounts.
Getting the word out
Standard Chartered passes on the insights it gains into the workings of human trafficking networks to its correspondent banks via its Correspondent Banking Academies.
“That serves two purposes,” explains Lewis. “It means that we have less chance of displaced risk coming to us through [the correspondent banks’] activities. But it also means that because so many of our correspondent banks are in source or transit countries for trafficking victims, it raises awareness and increases the number of eyes and ears that are on the lookout.”
Awareness is critical to Standard Chartered’s mission to thwart human trafficking. Frontline staff are trained to spot and respond to suspected victims coming into branches. Some common concerns to look out for are people who speak exclusively through a translator who may actually be their controller, or people who aren’t in possession of their passports, which are being held by a trafficker. The body language of victims of coercion can also send a strong signal, and as Barnes notes, “the best referrals are coming from human interactions.”
Ultimately, it’s the creation of a forum for interaction and collaboration between disparate stakeholders that endows partnerships such as JMLIT with so much potential to help unravel the complex web of financial crimes. It’s perhaps fitting that the best strategy to combat human misery would be a collective one.
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