Potent New Legislation Aims to Limit Banking for Human Traffickers

 In AML Surveillance, Human Trafficking

Earlier this year, Global RADAR reported on the seizure of Backpage.com, a once-thriving ad marketplace that had historically been used to promote human and drug trafficking, the sale of sex, and other illicit activity. In addition to the site’s closure, seven individuals associated with the company including its founders were indicted on 90+ counts that included the facilitation of prostitution. The fallout from this case and other similar occurrences both in the United States and abroad represents just how serious a crime trafficking in persons truly is, as it represents a direct breach of our most basic human rights. Yet despite the fact that this activity threatens national security and consistently undermines sustainable development in many parts of the world, the most frightening aspect of this unfortunate reality is that human trafficking – which encompasses forced labor and sexual exploitation – remains prevalent in virtually all walks of life today. While a global spotlight has now been cast on activity of this variety, attention that has in part lead to the increased prevalence of intergovernmental zero-tolerance policies and resources presented by both states and non-governmental groups, the number of people falling victim to human trafficking around the world continues to rise.

Statista, an online statistics and business intelligence company analyzing prominent industries around the world found that between 2008 and 2016 the number of human trafficking victims identified worldwide more than doubled from 30,961 to 66,520. While many have speculated that this exponential rise is positive in that it is directly correlated to increased advocacy and focus being placed on this issue that has ultimately lead to greater exposure and successful enforcement of these crimes, the issue undoubtedly remains that a significant portion of this activity remains concealed from federal and international authorities. Despite this trend, the number of convictions for human trafficking has nearly doubled in the past 10 years alone, with the charge surprisingly being led by smaller states in the regions of Central and South Asia, countries with far fewer resources than their counterparts in Europe and North America.

Not to be outdone, the United States has taken a monumental step forward of late in their own battle against human trafficking, as new laws including the Allow States and Victims to Fight Online Sex Trafficking Act enacted in 2017 (FOSTA) and the End Banking for Human Traffickers Act pushed to the Senate have given law enforcement and the victims of these crimes new tools to fight sex trafficking. These new bills have upped the pressure on financial institutions across the United States to abruptly close and/or deny the creation of banking and investment accounts of anyone with suspected involvement in trafficking and other illicit activities that have been previously targeted; the aim being to cut off access that criminals dealing in this sphere have to banking and their oft-laundered funds. From a compliance perspective, the bill will also require the U.S. government to report on the number of human trafficking-related money laundering cases that are investigated and prosecuted by both the Treasury and Justice Department’s each year. While the legislation will pertain to the United States in particular, it is also expected to impact countries abroad as well, as the latest bill will “require the State Department’s annual Trafficking in Persons (TIP) reports to include a nation-by-nation analysis of whether each foreign country has a mechanism to prevent financial transactions from people accused or suspected of human trafficking” (Rifkin, 2018). The legislation also places a greater emphasis on the role of the President’s Interagency Task Force To Monitor and Combat Trafficking in thwarting this activity globally. This detail, consisting of over 15 agencies across the federal government responsible for coordinating U.S. government-wide efforts to combat trafficking in person, aims to maintain progress in areas related to human trafficking such as victim services, laws, and public awareness and outreach. The End Banking or Human Traffickers Act will also see the Secretary of the Treasury added to the list of government entities found in the task force in an attempt to add an element of financial oversight to its proceedings moving forward. Due to the fact that dealing in human trafficking has developed into a hundred-billion dollar a year industry across the globe, the latest bill could help hinder the profits of these individuals significantly, as it “would connect federal regulators, law enforcement, and the banking industry to help strengthen existing anti-money-laundering efforts that combat traffickers” for the first time ever, while also ensuring that suspected traffickers can be prosecuted to the full extent of the law (Hatch, 2018).

The main concern that has arisen since the announcement of this pending legislation however has been for the financial well-being of the trafficked individuals. What organizers of the bill have worried about so far is how “these broad anti-trafficking initiatives are often applied in a targeted manner that hurts more vulnerable people rather than helps them,” explains Liara Roux, a sex worker and producer of independent adult media. “If this bill is passed in a climate where sex work is so stigmatized that no distinction is made between a trafficked individual and someone who is just trying to survive, you’re just as likely to see vulnerable people’s bank accounts closed as actual traffickers caught” (Hatch, 2018). The article “First Congress Took Sex Workers’ Websites. Now It’s Coming For Their Bank Accounts”, cited in BSA News Now on Tuesday, May 29th explains that because of this, the banking bill has already faced some opposition, with pessimists believing that it would be difficult to “see the benefit of updating labor and trafficking-related policies without consulting with the affected members of those industries and communities” beforehand (Hatch, 2018). While debatable, the End Banking bill is expected to have an impact on the financial sector in the years to come, as well as on the continuing fight against human trafficking in the United States. The extent of said impact however will remain to be seen.

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