As I watched the replay of the first forum on Combating Human Trafficking, originally held on April 9, 2013 at the White House, I was not only amazed at the stance and passion behind this topic, but also the resources that are being established and the steps being taken at a federal level to bring it to an end. Although I felt empowered and awed at these efforts, I also felt defeated and confused at the same time.
The forum featured many White House officials who highlighted and discussed the four commitments that are being taken in this effort, which were outlined by President Barack Obama in his address at the Clinton Global Initiative in 2013. While these four initiatives involve extensive elements, the main ideas include: first, the prevention of human trafficking through raising awareness within vulnerable populations; second, educating the public and first responders; third, prosecution through strengthening investigations and enforcement actions; and fourth, protecting society and providing support to the victims through social services.
As I listened to all of these astonishing efforts, and the stress put upon law enforcement personnel, support services, and so on, I thought, “Where do I fit in as a financial professional?” “What is the common theme in human trafficking (HT)?” “What is the driving force behind it?” The answer is money. Who better to combat HT than those in the institutions in which these funds could flow through?
As I reflected on all of this information, it brought me back to conversations I have had with others on this topic and it also made me think about the firms I have been a part of and what measures they took to fight this. Immediately, I recalled a conversation where we broached this topic and an initial reference was made by others to the movie Taken starring Liam Neeson, which involved the kidnapping of a former CIA operative’s daughter by human traffickers for sexual slavery. Many peers continued with comments that proved that in their eyes not only was HT only related to sex slavery but that it only occurred in “foreign” places. This, in turn, told me a story of a complete lack of education on this cruel reality. I thought further about the distinct firms I have been a part of and what I learned about this topic while there. I quickly realized that everything that I had learned surrounding this topic had been self-taught through online information and resources provided by ACAMS, FinCEN and the FBI. I had never received any real training on the topic, and I was completely unfamiliar with the measures taken by the firms of which I had been a part. How was this possible? How is it that financial professionals, those in one of the best, if not the best position to make a difference and end this fight, are not thoroughly educated on this topic? And how is the idea of financial professionals as an asset in this fight not a top priority from a federal perspective?
As I take what I know about the topic, I quickly realize that as financial professionals, we are in a great position and we are also in one of the most difficult positions to detect that there are no absolute HT red flags, but rather red flags that may pose as other criminal activity, and/or as other legitimate activity. Running various examples through my head, I choose one red flag: the reluctance or refusal of individuals to provide identifying information to a bank employee. This could indicate HT, drug smuggling, a fraud scheme, or even nothing illegal at all. Same with structuring activity, a sudden unexplained change in banking activity, or a mismatch between amounts paid and the occupation of the person—the examples could go on and on.
First and foremost is the education of staff
Given these challenges, two very specific things must happen within financial institutions to help support this cause. First and foremost is the education of staff. Just like a financial firm is required to conduct mandatory anti-money laundering (AML) or Office of Foreign Assets Control (OFAC) annual training, HT training must be implemented and should cover not only what HT is and the fact that it can and does happen close to home, but also the severity of the issue at hand and the red flags that could be associated. And while it is noted that there are no straightforward red flags, the main theme in the examples discussed above is that the activity is indeed unusual and needs to first be recognized and then reported by financial institution employees. This will establish a strong base of educated personnel and will, in turn, cause staff to recognize these red flags, ask the right questions and inform the correct people.
Second, but equally as important as the first, is the amp up of transaction monitoring within financial institutions. The guidance given around some of the possible common HT financial indicators focus on things like the transfer of funds with no logical relationship to the sender of the funds, or frequent/unusual use of night deposit drops or ATM machines for deposits, along with many others; most of which can only be detected at a transactional level. Given the example of frequent and unusual use of night deposit drops or ATM machines, a typical transactional monitoring system may review these types of deposits and alerts will generate for review based on exceeding the threshold of the given frequency of transactions and/or the total amount within a specified time frame. This may or may not result in a suspicious alert for unusual night deposits depending upon those thresholds.
Given this scenario, thresholds should be set up even more granularly, taking into consideration additional factors like night deposits between 10 p.m. and 6 a.m., or those occurring at different ATMs around the city or even in different states. Taking this same example, consider the following: Over a month’s time, an account shows 30 ATM deposits for $100 each, another account shows 30 ATM deposits for $100 each all occurring between 1 to 3 a.m. at ATMs in five different states across the U.S.
The reality is that the above activity is for the same account, but the story it tells is a completely different one once we have additional factors to consider. Transaction monitoring should be set up in that same fashion. Adding additional thresholds and constantly customizing and testing can truly make a difference in not only the detection of possible HT activity, but suspicious activity overall. In addition, the alerts that generate will, in turn, be much more valuable and will reduce the amount of false positives resulting in wasted efforts. Though it would be nearly impossible to say that certain transactional activity is absolute proof of HT activity, customizing and adding more granularity to the monitoring will help to ensure valuable alerts, and, in turn, bring investigation into that activity, and escalation to the proper authorities.
While both the education and training of employees and improving upon transaction monitoring seems rather basic, they are crucial components in this combat. I urge you all to think about what is being done within your own firms and what you can do to help in this fight that is being rallied at the federal level. Please do your part in researching within your own financial institution what resources are out there; does training that is HT focused exist, and are their transaction monitoring scenarios to appropriately monitor possible HT activity? If not, make it a point to bring this topic to the forefront in these areas; contact the key players within these groups and see how you can help in this effort. Though financial professionals were not called out specifically, we are an instrumental asset in this overall initiative to bring HT to an end.
