Human trafficking and money laundering are intrinsically linked. Infinity’s compliance officer, Duncan Taylor explains how Infinity is playing its part in the fight against this horrific crime.
What is human trafficking?
Human trafficking is the illegal act of recruiting, transporting, harbouring, or receiving people through the use of force, fraud, or coercion, for the purpose of exploitation. This exploitation can take many forms, including forced labour, sexual exploitation, slavery, or organ trafficking. Human trafficking is often referred to as modern-day slavery because it involves the control of individuals for personal or financial gain.
As with any form of illicit activity, it’s tricky to get accurate figures on the number of people who are victims of human trafficking. This was highlighted in a 2022 BBC documentary which told the story of British Olympian, Sir Mo Farah, who was trafficked to the UK from Somalia aged 9, a crime that went undetected for many years. Around the world, there are millions of unseen Mo Farahs being exploited by others for financial gain.
The United Nations Office on Drugs and Crime regularly produces a Global Report on Trafficking in Persons. While there was a brief decrease in detected human trafficking victims worldwide during COVID-19 due to travel restrictions – the first decline in 20 years – levels have since bounced back, continuing the depressing trend established between 2008 and 2019 where victims of human trafficking increased fourfold.
Human trafficking remains a critical issue in East and Southeast Asia, with India holding the dubious record of having the highest number of people in modern slavery in the world. In recent years, traffickers have shifted tactics, often targeting migrant workers who may be increasingly vulnerable due to unstable work environments and unfamiliarity with legal protections.
Human trafficking and money laundering
Human trafficking is a highly profitable crime. The International Labour Organization estimates that annual global profits from forced labour and forced sexual exploitation are $236billion, a figure which has risen dramatically in recent years.
The immense profits generated by this illegal activity require traffickers to develop sophisticated money laundering schemes to make these illicit earnings appear legitimate. The process typically involves funnelling profits from forced labour and sexual exploitation through complex layers of financial transactions—such as moving funds between different accounts, using shell companies, or making seemingly legitimate business investments. These activities obscure the illegal origins of the money, making it difficult for authorities to trace.
Money laundering perpetuates human trafficking by enabling traffickers to continue exploiting victims and reinvesting in criminal enterprises. It undermines financial systems, fuels corruption, and destabilises economies, especially in vulnerable regions. Additionally, it hampers efforts to combat human trafficking because, without the ability to follow the money trail, law enforcement agencies struggle to disrupt trafficking networks effectively. Therefore, stopping the laundering of these profits is crucial to dismantling trafficking operations.
Infinity and money laundering
Financial institutions play a crucial role in disrupting the laundering of money earned from human trafficking. As a compliance officer here at Infinity, my responsibilities include understanding and complying with regulations related to this form of criminality and implementing robust anti-money laundering (AML) frameworks.
It is hugely important that I put in place measures that can detect red flags indicative of trafficking-related transactions to facilitate the identification of perpetrators and entities involved.
Some of the red flags I might look out for are:
Unusual cash deposits:
A business, especially one not typically dealing in large amounts of cash, suddenly receives frequent or large cash deposits. These could indicate that illicit profits from human trafficking are being funneled through a legitimate business.
Frequent cross-border transactions:
Regular transfers of funds to or from high-risk countries known for human trafficking, without a clear business or personal reason, can be a sign of laundering trafficking proceeds.
Payments to multiple personal accounts:
A company or individual regularly sending payments to various personal accounts, often in small amounts, could indicate “structuring” to avoid detection. This is a technique traffickers use to disperse illicit funds across multiple accounts to mask their origins.
The odd timing of transactions:
A pattern of transactions taking place late at night, typically between 10 PM and 6 AM, could be a red flag, as money launderers often make transfers during off-hours to avoid scrutiny from financial institutions.
Mitigating money laundering risks
In order to mitigate money laundering risks, we use a variety of AML measures including the use of advanced monitoring tools, stricter customer due diligence, and real-time transaction alerts.
For Infinity’s customers, this can result in added layers of scrutiny when conducting financial transactions, such as more detailed identity verification during account setup or closer monitoring of large or unusual transfers. While this may lead to occasional delays or additional documentation requests, these measures are crucial to ensuring that we remain compliant and secure.
By identifying and stopping suspicious activities early, we protect both you, our customers, and the financial system from the risks associated with money laundering.
While we know they can be frustrating for 99.999999% of our law-abiding customers, these enhanced processes ensure a safer financial environment for us all and help us play a part in strengthening the global fight against human trafficking by tracking and freezing illicit funds.
Chartered FCSI
I have over 20 years of experience in the financial services industry and hold a Chartered FCSI qualification. I ensure that our operations are fully compliant with the rules of our most stringent regulators.
