AML Compliance aids fight against human traffickers
The U.S. State Department late last week released its 2016 Trafficking in Persons (TIP) report, and the results are not encouraging. Burma (also known as Myanmar) drew the most headlines when it slipped to Tier 3, the worst-possible ranking; and the ruling military government in Thailand no doubt gained a small measure of satisfaction when Thailand moved from Tier 3 to the Tier 2 Watch List. Thailand’s slight move upward was decried by human-rights groups who cite extreme child labor abuses among other grave concerns.
For financial institutions tasked with keeping criminals and money launderers out of the international financial system, the geographic risk—and the grave toll on victims—posed by human traffickers is vast, and it is spread out over various continents.
The Tier 3 list and the Tier 2 Watch List include over 70 countries. Tier 3 countries are deemed by the State Department not to be making significant efforts to meet the minimum standards to prevent human trafficking, and Tier 2 Watch List countries are described as making efforts and making commitments to efforts but there is an increase in victims of severe trafficking and/or there is no evidence of increasing enforcement efforts.
Andrew Prozes of the Association of Certified AML Specialists opined in American Banker last year that financial institutions should actively and explicitly strive to be a partner in the fight against human trafficking. Prozes also encouraged banks to identify news trends in illicit-fund behaviors and react quickly: “The valuable information supplied by compliance departments has helped law enforcement agencies form new typologies to detect human trafficking,” he wrote.
Prozes noted that victims of trafficking are rarely in a position to fight against it themselves, but authorities and financial institutions can work together to flag AML-related trafficking behaviors in the financial system. He noted for instance that financial monitoring is a powerful tool to identify businesses moving a lot of cash
Compliance officers and bank managers no doubt grow weary of the AML/CFT demands that seem to grow and grow, but reading some of the country narratives in the 2016 TIP Report are heart wrenching given the predominance of children, women, and the poor—and the horrors that victims of trafficking endure.
In Burma, for example, the TIP Report notes that child soldiers and child servants of the military remain common, and for men and women the following frequently occurs: “Some Burmese men in the Thai fishing industry are subjected to debt bondage, passport confiscation, threats of physical or financial harm, or fraudulent recruitment; some are also subjected to physical abuse and forced to remain aboard vessels in international waters for years. Burmese women are transported to China and subjected to sex trafficking and domestic servitude through forced marriages to Chinese men…”
The report, which focuses on whether and to what degree national governments fight human trafficking, provides details for each country in each tier, and it’s packed with examples of sex trafficking and forced labor—with virtually no avenues of escape or redress for the victims.
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Risk Data Service: Geographic Risk Updated Quarterly
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