Following the Money: Identifying the Financial Trail Behind the Global Human-Smuggling Industry
For years, the fight against human smuggling, that being the facilitation of illegal entry or movement of individuals illicitly for financial gain, has largely played out in areas where more traditional crime has often been affiliated: Along international borders, remote roads and back alleys, inside stash houses and in the vehicles used to transport migrants. While there is a distinction between human trafficking and human smuggling, the two criminal markets can overlap, with the financial systems used by often exploited by the other. This, coupled with the increasing sophistication and efficiency of these practices at the international level, has made this form of activity even more challenging for authorities to both identify and ultimately prevent. This overlap is also one reason that financial investigators increasingly view the movement of people as part of a much broader organized-crime problem. But increasingly, investigators are looking behind the scenes to better thwart this form of illicit activity and are having good success in doing so.
The human smuggling business at its most basic level one built around transportation and the subsequent exchange of funds under a veil of secrecy. In these ploys, migrants pay for a service that sees criminal networks arrange transportation, lodging, documents and facilitate border crossings. While the people doing the physical work may change from one operation to another, the financial structure behind the operation can remain remarkably persistent. As such, the Financial Action Task Force (FATF); the global standard-setting body for combating money laundering has warned that migrant smuggling has developed into a major profit-generating criminal enterprise, although its associated financial flows are frequently under-investigated. All told, the gross scale of human smuggling globally accounts for upwards of $150 billion annually.3 Last week, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released a Financial Trend Analysis in which it identified nearly $5 billion in transactions potentially related to human smuggling between 2023 and 2025 alone. While this $5 billion figure is not a measurement of proven criminal proceeds, this figure is significant in that it shows that the criminals orchestrating these growing operations are not shying away from maintaining traditional banking relationships for purposes of laundering their illicit proceeds.
FinCEN’s analysis also found that over the aforementioned period, domestic financial institutions filed a total of 67,540 suspicious-activity reports potentially connected to human smuggling. The report, which analyzed patterns and trends identified in Bank Secrecy Act (BSA) data over this nearly three year-long period, also identified several consistent indicators linked to these activities as they relate to the financial sphere, providing tools for those operating within this space to better identify and report suspicious activity to hinder this destabilizing trend. Several of the primary indicators highlighted in the report include relationships between senders and recipients that could not be verified (i.e. accounts receiving money from large numbers of seemingly unrelated people), transactions sent along common migration routes, and established a direct link to excessive cash-based financial activity conducted along the southwest border of the United States.1 The analysis of the suspicious-activity reports (SARs) generated by financial institutions as a requirement under the Bank Secrecy Act (BSA) in relation to these criminal activities also provided something that investigators could not easily obtain from those manning the border alone, that being a view of the infrastructure that makes human smuggling profitable.
Human smuggling does not vary significantly from conventional cross-border drug smuggling operations in that the funds derived from these activities ultimately have to be collected. In these someone, someone has to move it (it being both funds and humans), someone has to receive it, and someone ultimately has to turn the proceeds of these crimes into something that can be spent, invested or transferred again. This money trail is increasingly becoming a target of the broader international fight against transnational criminal organizations. The FATF has identified the use of informal value-transfer systems, legitimate businesses such as travel agencies and transportation companies, cash and professional money launderers as some of the key mechanisms in these ploys used to move or disguise smuggling proceeds. ²
FinCEN’s latest data also offers an interesting perspective as to where suspicious activity is being detected. Somewhat surprisingly, the vast majority (about 97%) of the reports in FinCEN’s FTA dataset were filed by money-services businesses (MSBs). These businesses include money transmitters and other companies that facilitate the movement of funds outside traditional banking relationships. ¹ The reports from these entities frequently described transactions that did not fit a customer’s normal financial behavior, payments moving to locations along established migration corridors and activity that appeared structured to avoid reporting or recordkeeping requirements. In 59% of the MSB reports, the institution said there was no verifiable familial relationship between the person sending the money and the person receiving it.¹ This in itself is not directly indicative of crime (as a person sending money abroad is often completely legitimate). However, dozens of unrelated people sending money into the same account, followed by rapid transfers to another country, is a different proposition altogether. Identifying this distinction is at the heart of modern AML work as it relates to the fight against human smuggling.
Another interesting finding in the FTA was that while traditional banks produced only about 3% of the reports in FinCEN’s dataset, their filings represented approximately 61% of the suspicious dollar amount.1 This means that while money-services businesses are seeing the highest-volume of filings (which is to be expected, as series of smaller transactions often accompany smuggling operations), traditional banks are handling much larger financial flows. FinCEN also identified several recurring patterns in bank filings, including structured cash deposits, the use of so-called funnel accounts (i.e. an account that appears to belong to a normal individual or business that begins receiving deposits from numerous unrelated people, potentially across multiple geographic locations), and travel agencies arranging transportation for migrants, with some of the businesses involved in these ploys being deliberately established as fronts. In other cases, however, legitimate companies have had their services exploited without their knowledge, creating a difficult problem for compliance departments: Determining when ordinary financial activity has become part of something extraordinary.
This is where financial intelligence has become particularly valuable to law enforcement, often stemming from the compliance departments of the modern financial institution. A bank or MSB may see dozens of payments associated with the people arranging the transportation in smuggling schemes, far exceeding the capabilities of border agents or local authorities working on the ground. This financial trail can then potentially connect pieces of an organization that would otherwise appear unrelated. Following the money also illustrates why financial records can be so important. The physical act of smuggling often occurs hundreds or thousands of miles away from the people controlling the operation. Identifying and investigating the financial flows behind them can then connect those participants, allowing for entire criminal organizations to be exposed and leading to a more lasting resolution with respect to international smuggling exploits.
In reality however, the job is not as simple as it sounds. The FATF has previously warned that proceeds from migrant smuggling can move through hawala and other informal value-transfer mechanisms, as well as through businesses that appear legitimate. ² The growth of digital assets has also added another layer of complication for investigators. FinCEN has previously identified cryptocurrency-related activity in investigations involving human trafficking, while FATF continues to warn that virtual assets can create additional money-laundering risks.4 This trend reflects a broader reality of financial crime that has seen criminals migrating towards whichever financial channels offer the greatest degree of speed, access and anonymity. Unfortunately for financial firms and the proper authorities, as regulators close one route, another often emerges.
In its trend analysis, FinCEN also found that many smuggling networks generate profits for larger transnational criminal organizations, including Mexico-based drug cartels, making the money generated by smuggling potentially more consequential than the underlying transportation operation. The scary realization is that a payment from a migrant for transport can ultimately develop into revenue for an organization with far greater reach, including those operating in the realms of narcotics and weapons trafficking, extortion and other criminal enterprises. In response to this growing relationship, the U.S. Treasury Department announced a data-driven border operation intended to identify cartel-related money laundering and use the financial system to target drug traffickers and human smugglers as of late 2025, signaling that investigators will continue to increasingly utilize financial activity to identify and thwart these physical mechanisms.
Altogether FinCEN’s analysis does highlight a challenge for banks and money-services businesses in distinguishing legitimate cross-border commerce from transactions that have been originated by criminal networks. This requires compliance teams to move beyond simple transaction thresholds and better analyze transactional behavior, relationships, geography and emerging patterns across their accounts. As evidenced in their report, financial service providers are expected to continue serving as an important warning signal for law enforcement, using the transaction monitoring, data analytics and suspicious-activity reporting suites in tow to identify criminal activity that may otherwise remain hidden. In spite of increasing automation, the compliance burden required remains substantial, however. Detecting increasingly sophisticated schemes requires more efficient components and better data, as well as up-to-date technology and human investigation skills. Getting this intricate balance wrong can either allow illicit activity to continue undetected or unnecessarily push legitimate customers outside of the regulated financial system.
Citations
1. Financial Crimes Enforcement Network. FinCEN Analysis: Financial Institutions Flagged Nearly $5 Billion Linked to Suspected Human Smuggling. 13 August 2026.
2. Financial Action Task Force. Money Laundering and Terrorist Financing Risks Arising from Migrant Smuggling. Published 22 March 2022.
3. Financial Action Task Force. Financial Flows from Human Trafficking. 2 August 2018.
4. Financial Crimes Enforcement Network. Use of Convertible Virtual Currency for Suspected Online Child Sexual Exploitation and Human Trafficking. February 2024.