Human trafficking, financial markets impact examined

The Financial Services Committee Subcommittee on Oversight and Investigations recently conducted a hearing exploring the impact of human traffickers on domestic financial markets.

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Officials said the intent of the effort was to gain insight into how financial institutions monitor, review and verify depository relations with a payment processor and understand potential problems and long-term challenges – including examples of how human traffickers avoid detection.

Subcommittee personnel said notable insights revealed human smuggling and trafficking have been among the fastest growing forms of transnational crime while understanding how traffickers exploit financial markets is key to addressing modern day slavery.

“As with any large multi-national criminal enterprise, the lifeblood of human trafficking is the ability to transfer money,” Rep. Ann Wagner (R-MO), subcommittee chair, said. “If the traffickers are unable to move their ill-gotten proceeds or to purchase adds to traffic victims on sites such Backpage or the Erotic Review—their schemes fail. To date, Congress has not devoted sufficient attention to the vitally important question of how do we ensure that our financial markets are not being exploited by these traffickers. That changes with this hearing.”

Financial forensics consultant Bassem Banafa said financial institutions have grasp on fraud prevention, detection, and mitigation.

“The threat of a potential loss justifies the resources required to address fraud effectively,” Banafa said.”The threat also creates a clear performance indicator – higher losses are bad, lower losses are good. This is not the case with money laundering and consequently not the case with payments processed for human trafficking rings and other criminal organizations. There is no clear benefit to the institution other than the vague idea that they’ve avoided reputational risk and trivial sanctions and penalties.”