What financial institutions can do
Behind every tragic news headline, there’s often a financial footprint. Smugglers are moving money through wires, funnel accounts, P2P apps, and other informal channels. That means banks and credit unions are in a unique position to help spot these networks early, and FinCEN is counting on them to do just that.
While the mechanics of smuggling have evolved, the guidance hasn’t changed. FinCEN’s January 2023 alert on human smuggling remains one of the most detailed roadmaps available for financial institutions. It outlines common typologies, behavioral red flags, and how institutions should report suspicious activity.
Due to a convergence of factors, human smuggling has become even more urgent for financial institutions to track. Migration into the United States, particularly along the southwest border, continues to soar, with over 2.9 million U.S. Customs and Border Protection encounters in 2024. At the same time, the reinstatement of Trump-era enforcement priorities is reshaping the landscape, bringing back large-scale detentions, expedited removals, and tighter asylum restrictions.
Meanwhile, the financial side of smuggling is evolving rapidly. Criminal networks are leveraging technology to move money faster, in smaller amounts, and through platforms that didn’t even exist a few years ago, making it harder for institutions to detect illicit flows.
FinCEN red flags
FinCEN’s 2023 alert was clear: financial institutions are a frontline defense against human smuggling, which deserves as much attention as drug trafficking or cybercrime. The red flags highlighted in the alert are still relevant today:
- Transactions involving multiple wire transfers, cash deposits, or P2P payments from multiple originators from different geographic locations with no apparent business purpose.
- Deposits made by multiple individuals in multiple locations into a single account with no apparent business purpose.
- Currency deposits into U.S. accounts without explanation, followed by rapid wire transfers to countries with high migrant flows.
- A “funnel account” in one geographic area receives multiple cash deposits, often in amounts below the cash reporting threshold, from which the funds are withdrawn in a different geographic location with little time elapsing between the deposits and withdrawals.
- Frequent exchange of small-denomination for larger-denomination bills by a customer who is not in a cash-intensive industry.
- Multiple customers sending wire transfers to the same beneficiary inconsistent with the customer’s usual business activity and reported occupation.
- A customer making significantly greater deposits—including cash deposits—than those of peers in similar professions or lines of business.
- A customer making cash deposits that are inconsistent with the customer’s line of business.
- Extensive use of cash to purchase assets, such as real estate, and to conduct transactions.
- Cash is used to purchase big-ticket assets like vehicles or real estate, but there is no apparent source of funds.
If your team sees signs like these, FinCEN wants suspicious activity reports (SARs) filed with FIN-2023-HumanSmuggling in the narrative and in Field 2. A crime does not have to be confirmed; a well-explained suspicion is enough.
The bottom line
Human smuggling isn’t only a border issue; it’s a financial one. It’s fast-moving and increasingly digital, but the signs are there if you know what to look for. Now’s the time for financial institutions to:
- Train teams on relevant red flags
- File SARs when suspicious patterns emerge, even if you’re not 100% sure what the crime may be
- Stay current on FinCEN guidance and future alerts
Smuggling isn’t new, but the scale, tactics, and consequences are evolving quickly. Today’s smugglers operate like organized businesses, using digital tools, informal payment networks, and complex financial layering to move both people and money. Financial institutions, especialy those located near the border, are in a unique position to disrupt these operations by spotting suspicious activity early. The faster the detection, the sooner the harm can be stopped.
