On February 23rd, 2021, the Carolinas ACAMS Chapter was joined by Sarah Byrne, Senior Counsel at Moore & Van Allen, Larry Cameron, Chief Information Security Officer at the Anti Human Trafficking Intelligence Initiative, and David Marwell, Senior Vice President of Enterprise Financial Crimes Compliance Operations at U.S. Bank in a panel moderated by Nicolas Khouri, Senior Compliance Director of AML Investigations at Ally Bank, to discuss the vulnerable population of human trafficking victims.
Human Trafficking Defined
Sarah Byrne kicked off the discussion by defining the two types of trafficking: sex trafficking and labor trafficking. Byrne explained that sex trafficking is inducing someone to engage in a commercial sex act by using force, fraud, or coercion, or if that person is a minor; while labor trafficking is compelling someone to work through force, fraud, or coercion. Byrne further explained that most cases “really center around the coercion piece as the tactical means to compel the victims to work.” That coercion can come in many forms, such as threats of serious harm to or physical restraint against a person’s will; threats to harm to a victim or the victims' family; psychological abuse; threats to report illegal activity; confiscating identification documents and more. When discussing who becomes victimized, there was a theme of underlying vulnerability in the most common victims: runaway children, victims of child sex abuse, victims of domestic violence, homeless, jobless, addicts, guest workers, and those with a diminished capacity or competence. Human trafficking can happen on a small scale or can involve enterprises of networks. Human trafficking is one of the most profitable and destructive crimes worldwide and generates billions in illicit revenue every year. Byrne further elaborated on this by sharing recent information from the US Department of Treasury’s 2020 report to Congress in which they identified money laundering linked to human trafficking as one of the most significant illicit finance threats facing the United States.
Legal and Regulatory Environment
Byrne then touched on the varied and vast legal frameworks related to human trafficking on an international and domestic level, as well as criminal vs. civil liabilities associated with the act. The Trafficking Protections Victims Act (TPVA) imposes criminal liability on corporations that benefit financially from human trafficking if the organization recklessly disregards that the company was involved in the scheme. It is important to note that companies can also be held civilly liable under the TPVA if victim(s) can show from a mere preponderance of the evidence that the company benefited financially and should have known that it was involved in a human trafficking scheme. Byrne then discussed a recent case, M.A. v. Wyndham Hotels & Resorts, Inc. out of the Southern District of Ohio, in which the sex trafficking survivors(plaintiff) made the argument that the hotels (defendants) were in violation of the TVPA, as they knew or at least, should have known that some of their hotel locations were used as a haven for sex trafficking and did nothing in response. Wyndham Hotels filed for a Motion to Dismiss, which was denied, and the case is currently in the discovery phase. According to Byrne, this and similar cases finding companies liable under the TVPAforecast future cases, yielding stronger consequences for companies that are involved with this horrendous crime. Aside from the TPVA there is an ever-growing body of business human rights law (United Kingdom Modern Slavery Act of 2015, Commonwealth Modern Slavery Act of 2018, Strengthening Protections Against Trafficking in Persons in Federal Contracts Act, California Transparency in Supply Chains Act, and more), which at this time appears to center around mandatory disclosures of what companies have done (including financial institutions) and how they have identified the labor abuses either within the company or in the supply chain. Byrne rounded up the segment by stressing the area of law in which is most applicable to those in attendance, The Bank Secrecy Act (BSA) and the regulatory obligations that accompany it. In October of 2020, FinCEN issued special guidance on the impact of COVID-19 regarding labor exploitation risks; stressing further that human trafficking is a top priority despite the pandemic and the limitations it has presented. This is especially worth noting, as FinCEN has not released guidance on identifying trafficking in AML process was in 2014. “Because the information financial institutions collect and report is vital to identifying human trafficking and stopping the growth of this crime, it is imperative that financial institutions enable their detection and reporting of suspicious transactions by becoming aware of the current methodologies that traffickers and facilitators use”- FinCEN Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity, October 2020.
New Strategies Around Detecting Human Trafficking
Once the audience had an understanding of what human trafficking is, where it can happen, who it can happen to, the legal climate surrounding it, and the importance of detection and reporting, the conversation shifted to some new ways the collective “we” can detect human trafficking. Larry Cameron joined the discussion to cover the emerging risks, and related typologies and detection to identify human trafficking.
Larry elaborated on the legal risks that Sarah had shared, while also stressing that there are reputational risks to consider and that the Anti-Human Trafficking Intelligence Initiative “promotes corporate social responsibility, and we provide the tools and training to help combat human trafficking.” Cameron then shared a High-Risk Human Trafficking Dataset, which is done via data collections and is then provided to financial institutions to “plug and play,” into their Onboarding or Compliance, AML, Human Trafficking, Risk, OFAC Sanctions processes, and screening. The financial institution will take the dataset and then “scrub it against their customers and look for specific matches. These matches could be in the form of the name or the business an email address, phone number, physical address, etc.; once a match is detected, a red flag is triggered. This flag will then allow the financial institution to do more of an Enhanced Due Diligence screening, and to go through the transactions with a fine-toothed comb. Cameron explained that often, you will not know human trafficking is present unless there is a red flag; further explaining that criminals have found ways to cheat the typical transaction monitoring typologies. The datasets created by the Anti-Human Trafficking Intelligence Initiative are able to fully integrate into the monitoring and detection processes at the respective institutions to help the user of the dataset investigate, document, and report to FinCEN (US) or FinTRAC (Canada), or international law enforcement.
Cameron then provided examples of data collections and discussed Entity resolution; a service that the company offers in which they try to match up names, email, phone numbers, and other fields in order to uncover the businesses that are behind the human trafficking in addition to providing the dataset. In addition to their own dataset, they use additional datasets and scrub their data against those to identify additional red flags. Cameron further explained that it is difficult to prosecute human trafficking, so the datasets might be used to prosecute money laundering and fraud, as those are easier crimes to prosecute. The data provided to the company or financial institution by the Anti-Human Trafficking Intelligence Initiative is made searchable by multiple different points. The data can also be “mapped out,” an example included mapping out a business entity, in which all the information about that business is shown, how it links, what points it links by (all of these can be “pivoted and expanded”) to display even more information. Cameron continued to show specific examples of the data sets, how the data can be mapped out, how the data can be exported, and the creation of dashboards based on the data sets that helps them prioritize the data and findings. Please see the presentation materials to see the examples in more detail.
Strategies at Work- A Financial Institution Perspective
Nicolas Khouri then switched the conversation over to human trafficking from a financial institution’s perspective and asked Dave Marwell to share with the audience his lesson’s learned, and to share ideas that he has brought forward and developed in regards to detecting human trafficking that could be helpful to other financial institutions. When sharing emerging risks and typologies, Marwell discussed how difficult it can be to identify human trafficking, and that once it is identified, it is imperative to continue to look for vulnerabilities in the system that need to be refined.
Marwell shared the process of typology development with the audience, in hopes that it could help them and their financial institutions with detecting and reporting human trafficking:
Problem > Brain Storming > Data Analytics > Cases and SARs > LE Investigations > Refine
Marwell elaborated, “This typology development environment involves a relatively strong understanding of risk, and real-time access to data and honed in investigative skills to turn that data into knowledge. Through forward-thinking analytics, these groups help to identify and help mitigate emerging internal and external risks involving human trafficking across the organization, and help position the bank to stay a step ahead of the regulatory and reputational challenges that are naturally associated with human trafficking risks.” Marwell believes that in order for financial institutions to be successful, they must think of risk identification and mitigation being one. “When you base the human trafficking element to data analytics and extensive research and provide intelligence derived from law enforcement interactions (which we all know to be a key to our success); all of this will build a stronger controlled infrastructure for the financial institutions and banks.” Marwell’s stated that “Law Enforcement cannot arrest their way out of this problem,” and challenged the audience to encourage their financial institutions to analyze various behaviors and trends represented in various data populations for customer products, geography and typology risks, and red-flag indicators that fall outside the purview of a larger transaction monitoring process; and to partner with law enforcement who relies on us for that information. “We need to collectively gain more intelligence from robust relationships with law enforcement, and we need to have a better understanding of key emerging risks while partnering with IT to better understand data availability. It is vitally important to take what law enforcement is seeing and learning and apply it to our respective technology operation groups, and try to come away with an automated transaction monitoring process to create sustainable monitoring based on what we have learned from various human trafficking research and development.” By working with law enforcement, state department, government and non-government agencies (who work extensively in this space) leveraging 314(b)s, Marwell saw the creation of a task force type of environment that allowed everyone to come together to help further the human trafficking operations and investigations. One significant finding that came from this, was the realization that while “human trafficking happens 365 days a year, large events in particular like the Super Bowl, NASCAR races, All-Star Games, Comicon, etc. provide a significant concentration of people in a relatively small area, which becomes desirable for traffickers to bring their victims in for purposes for commercial sex exploitation. As a result of this information, and collaboration, new and enhanced typologies were put into place to help identify this activity when the large events take place. Another example of how collaboration fosters success in the fight against Human trafficking, are Red Flag indicators shared by Marwell that were created because of U.S. Bank’s partnership with Homeland Security Investigations:
Client/Account Indicators
Transactional Indicators
Behavioral Indicators- Coercive behaviors by a potential trafficker acting on behalf of the victim
Behavioral Indicators -Appearance of potentially trafficked individuals
Supporting Survivors of Human Trafficking
Khouri circled back to Byrne about her work in supporting human trafficking victims. Byrne who has conducted a survey of human trafficking survivors was asked to share some of her results with the audience to inform them of how we can better support the survivors of human trafficking. “In my mind, the most important thing for a financial institution response is being survivor informed and survivor focused. This means both understanding the victim experience and engaging in supportive programs.” As a part of Byrne’s survey, she asked victims what they wished Banks would do differently, and gathered the following results:
Training for Retail Bankers
Build Protocol for Response to Self-Identifying Survivor
More Focus on Deposits
Follow up to Account Closure
Information Sharing with Other Banks
Information Sharing with Credit Card Divisions and Companies
The session ended with the panelists reinforcing collaboration once again. Marwell stated, “Collaboration is the key on a lot of these cases and issues, and to every extent that we can rally together and work together, we must.” Cameron echoed those sentiments sharing, “Human trafficking is not a competition, and everybody needs to work together to combat this issue.”
Written by: Jeana Parrish, Associate Board member of ACAMS Carolinas Chapter
Moderator: Nicolas Khouri, CAMS Senior Compliance Director, Enterprise AML Investigation ALLY
Speakers: Larry Cameron, CISO at Anti-Human Trafficking Intelligence Initiative (ATII) David Marwell, VP, Enterprise Financial Crimes Compliance - Special Investigations at US Bank Sara Byrne, Senior Counsel at Moore & VanAllen
Link to the presentation:
Contact information of the presenters:
Larry Cameron - https://www.linkedin.com/in/larrycameron80/ ; Larry@FollowMoneyFightSlavery.org
Sarah Byrne - sarahbyrne@mvalaw.com
Dave Marwell - david.marwell@usbank.com
