Banks network to flag human traffickers

A coalition of large financial services companies and nongovernmental organizations wants to enlist more midsize and small banks in the fight against human trafficking.

Bank of America, American Express, Paypal and Deutsche Bank are among those that have joined forces with the Thomson Reuters Foundation, Western Union, the nonprofit advocacy group Polaris and others to teach U.S. banks to spot signs of human trafficking activity in transactional data. They seek to close the gap that exists between large and small banks in the sharing of information about potential criminals.

“If you can get banks identifying that suspicious activity, capturing that data, and channeling it to law enforcement, it’s not difficult to see how they can make a real impact in identifying human traffickers and supplying the vital evidence that’s needed to bring these people to account,” said Kerry Stares, the foundation’s global head of legal issues.

The group has developed educational resources for financial institutions that resemble a similar effort launched last year for European banks. The foundation organized the U.S. Banks Alliance, whose members contributed some of their own knowledge and experiences with the subject. Canadian banks and law enforcement began a similar partnership, Project Protect, in 2016.

The International Labour Organization estimates that profits generated globally from forced labor top $150 billion per year, putting human trafficking on par with art dealing and drug trafficking.

With troves of financial data at their fingertips, anti-human-trafficking advocates argue that banks are uniquely positioned to help fight the scourge of human trafficking. Financial data is especially critical to bolstering cases against suspected traffickers, when law enforcement might otherwise rely heavily on the testimony of very scared and vulnerable victims, Stares said.

But while large financial institutions often have strong connections to law enforcement officials who can offer red flags to watch for and feedback about suspicious activity reports, smaller banks do not always get that kind of exposure.

“For your average community bank, if they don’t have a particularly high suspicious activity report volume, they don’t get that feedback, and unless they’re seeking it out and keeping up to date on these things, they’re really not going to get exposure to it, so there really is a gap at the moment,” said Matthew Van Buskirk, a co-founder of Hummingbird Regtech.

Jo Ann Barefoot, a co-founder along with Van Buskirk of Hummingbird and a former deputy comptroller of the currency, said that lack of feedback has been a continual source of frustration for the industry.

“Most of the time they file a suspicious activity report, and then they never get any feedback. They don’t know if it was useful or whether it lead to an investigation by law enforcement,” she said. “They feel like they’re sending information into the void.”

The coalition offers a toolkit, delivered in a PDF format and free to any bank that wants it, that includes a number of case studies and other indicators that bankers may encounter in their daily work, said Scott Apodaca, the global head of Western Union’s anti-human-trafficking initiative.

The red flags generally fall into three main categories: transactional indicators, like suspicious flows of money into and out of the bank; demographic indicators, such as the know-your-customer data generally collected when an account is opened; and behavioral indicators, perhaps activity that branch staff might observe.

For instance, transactions originating in certain parts of the world, like sectors of Central America or Asia, or tied to certain kinds of businesses, such as massage parlors or cleaning services, might trigger some further investigation.

“The toolkit does not suppose that all these patterns are specifically related to human trafficking, but really just indicates what might merit further investigation or analysis based on what that investigator or that analyst may have in front of them,” he said.

Barefoot and Van Buskirk praised the toolkit as “a great step” in bringing greater information sharing to smaller financial institutions, although they also said that more technology could ultimately be the key to stopping human trafficking. Van Buskirk said that he would ultimately like to see adoption of open source technology freely available to any financial institution that wants to use it.

“The criminals are able to share information freely amongst themselves, and if we are not able to move just as fast then we’re always going to be on defense,” he said.