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9 Best AML Practices To Lower The Rate Of Human Trafficking

Human trafficking is a serious humanitarian offense, a grave money laundering act, a hideous financial crime, and a never-ending disaster for society. According to estimates made by the International Labor Organization in 2020, illicit profits from human trafficking activities had topped $150 billion from 25 million victims. Governments throughout the world are enacting measures to identify and prevent Human Trafficking as well as financial regulations that provide traceability, freezing, and confiscation of the illegal profits that it generates, in response to the severe emotional and physical harm that it causes to individuals and communities.

When it comes to combating human trafficking, financial institutions are crucial players by focusing on the unlawful money that they create. This will help identify the individual culprits and decrease the opportunity for criminal organizations to take advantage of vulnerable individuals for financial benefit. With this importance, they need to be aware of their regulatory obligations regarding human trafficking and know how to implement appropriate counter-financing of terrorism, financial fraud, and anti-money laundering procedures.

Now you must have some important questions like what is a link between Human Trafficking and Anti-Money Laundering? How do Financial Sanctions and global regulations help to combat this heinous crime?

Continue reading this article, because we have covered all those concerns.

Lets grab the basic idea of Human trafficking!

What Is The Concept Of Human Trafficking?

Human Trafficking has become a modern issue of slavery which employs forced labor and exploitation of individuals for profit. It is an illegal trade in human beings: no matter their age, nationality, or gender; millions of women, children, and men everywhere in the world are confined, transported, bought, and sold as slaves while they are being forced to work with no choice.

According to the US Department of State, 27.6 million people are enslaved at the present moment. It is quite surprising that this venture must be one of the most profitable “criminal businesses” in the world with 150 billion dollars coming in each year. International Financial Sanctions would be an asset in the process of the elimination of human trafficking and slavery worldwide.

This image shows the United Nations Global Report on Trafficking in Persons 2022

How Do Human Trafficking And Money Laundering Interconnect?

One of the most lucrative illegal activities in the world, human trafficking has the potential to bring in large sums of money for its perpetrators over time. The proceeds from the forced labor would constitute illegal money and, therefore, have to be camouflaged to add to the regular financial system. Given these circumstances, it can be said that Human Trafficking is a foundational offense of money laundering, meaning that money laundering is a necessary consequence of the former crime for the latter to occur.

This illustration shows the common red flags or indicators of human trafficking

Human Trafficking And Regulatory Bodies

In April 2023, The Romanian and Irish law enforcement agencies succeeded in collaboration with the Eurojust in capturing a human trafficking ring originating from Romania and running the business in Ireland. The law enforcement officers learned that the criminals laundered the money earned from their victims through international fast money transfer services, bank accounts opened in the names of the representatives’ faces, and also through buying real estate companies set up inside Romania.

In December 2023, The UK’s HM Treasury imposed monetary and Sanctions Check for human rights violations against certain individuals and entities related to Thailand, Malaysia, Myanmar, Cambodia, China, and Laos that are involved in practices of trafficking individuals, who are then forced to work as scammers targeting the English-speaking population.

Therefore, to tackle human trafficking as one of the primary offenses, most governments obliged domestic rules and regulations to meet the AML Sanctions Screening requirements. For instance, the 6AMLD of the European Union defines money laundering along with other illegal activities as a part of the harmonized list of money laundering predicate offenses. All member states of the EU are obliged to fight human trafficking as a predicate offense and pass relevant AML regulations concerning it.

This image shows the role of global sanctions in combating human trafficking networks.

To fulfill 6AMLD and globally implemented anti-money laundering laws, financial institutions must comprehend how illicit actors transfer money to conceal the source of their income.

With that in mind, one must understand the importance of the most effective AML Sanctions Screening measures to curb human trafficking.

Lets move forward and get clear insights about these AML measures in this article.

Best AML Screening Practices For Human Trafficking

Financial institutions are in a standalone place to prevent money laundering because they can stop the proceeds of laundering by criminals. One of the ways for financial institutions to uncover illegal gains from human trafficking is to screen new customers at onboarding and monitor their businesses reliably. As per FATF principles, firms may take a risk-based approach to screen customers posing a higher risk for ML and may implement more concise Global sanction screening measures.

This image shows the Structure and level of traffickers organization identified by the United Nations Global Report on Trafficking in Persons 2022

Therefore, an effective AML Sanctions Screening solution for human trafficking must follow these parameters:

Enhanced Due Diligence
Perform thorough due diligence on clients and transactions that carry a higher risk because they are connected to industries or areas where human trafficking is common. For this purpose, proof of the source of large transactions and any anomalous behavior that could signal money laundering activities is another important requirement.

Risk-Based Approach
Implement a risk-based AML framework, where the placement of the most valuable resources to risks is proportionally assigned to clients, businesses, and geographic areas. This encourages the targeting of preventive measures in the places that are identified as vulnerable to outbreaks.

Adverse Media Checks
Companies must screen customers for all the unfavorable stories that might be directly or indirectly related to Human Trafficking. An effective media monitoring strategy would include global sources of media, and demonstrate the ability to concord different names across different cultures and naming systems.

Watchlists Screening
By operating illegal businesses related to the trafficking of human beings, traffickers end up being enrolled into global sanctions and watch lists. Companies need to have solid and proactive watchlist and Sanction list screening procedures that will immediately get their customers whose name matches the sanction and watchlists as soon as they are designated.

Transaction Monitoring
Establish high-tech monitoring and reviewing systems that will alert instantly of possible trafficking patterns like unusual high-value transactions, fast movement of funds across borders, and transactions being processed in countries exposed to an elevated degree of risk.

Employee Training
Make sure that all employees, especially from compliance, finance, customer support teams, etc. are trained to detect signs taking place during trafficking and know what to do if they suspect any such activities. Training should be conducted regularly and the most recent tactics deployed by the traffickers should be taught to make it effective.

Regulatory Compliance
The financial institution must stay up to date with a local and international anti-money laundering regulation and Sanctions Check to ensure full AML compliance and avoid penalties enforced by the government to fight the illegal flow of money.

Collaborative Efforts
Collaborate with law enforcement, banks, and other NGOs whose work is to eliminate trafficking. The exchange of information and intelligence often leads to better detection and reduction of trafficking networks.

Use of Technology
Utilize the most sophisticated technologies, such as artificial intelligence and machine learning, to add accuracy to transaction monitoring and identify complex patterns and covert transactions that may be associated with money laundering or human trafficking.

By combining these best practices in their AML frameworks, entities can stop as well as obstruct offshore accounts, correspondent banking, currency conversions, and deposits in ways that constitute money laundering within the financial infrastructure that supports human trafficking networks. A great number of organizations can therefore combat Human Trafficking and contribute to wider efforts to battle this global issue.

To sum this all up, Human Trafficking is an extremely deadly crime that can have a detrimental effect on society and hurt all of the innocent victims, both physically and emotionally. Human Trafficking is also dangerous as it can often go below the detection radar and is a booming business that is based on the profitable exploitation of human beings. Criminal organizations camouflage the profits of human trafficking and then pour the money back channeled into criminal circles; whereupon, they become a big threat and dangerous to society and the state. Compliance officers should be vigilant and ready to recognize any signs or behaviors that may suggest human trafficking when they are conducting AML sanction screening and Sanction Monitoring.

AML Watcher is the leading Global sanction screening platform that offers reliable, detailed, and real-time Sanction list screening services. Spot high-risk users by screening them with our 60,000-plus global watchlists, sanctions lists, PEP lists, and adverse media checks. All this is done automatically with our AI-powered AML Screening and Ongoing Monitoring solution.

At AML Watcher, we are glad to provide customized biometric AML screening solutions that allow businesses around the world to meet regional and international legislations crafted to avoid money laundering linked with human trafficking and to defend the most vulnerable humans from being exploited.

At AML Watcher we regularly update our watchlist, international leaks, PEP lists, and negative media checks every 15 minutes to get the most recent data. Profiles are appropriately tagged and structured using FATF-aligned categorization, to help organizations quickly identify the kind of sanctioned users.

Contact our experts now to get quick alerts when any information matches the given dataset associated with human trafficking news.

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