FinCEN Offers New Advisory on Human Trafficking

Terri Luttrell, CAMS-Audit
November 10, 2020
Read Time: min

The Financial Crimes Enforcement Network (FinCEN) has issued a new advisory on identifying and reporting human trafficking, supplementing its 2014 guidance. Financial institutions, big and small, play a pivotal role in detecting and reporting suspicious activity related to human smuggling and human trafficking. Together with law enforcement, FinCEN has identified 20 new financial and behavior indicators of human trafficking and four additional typologies since the 2014 advisory.

Unfortunately, among the detriments of COVID-19, the coronavirus pandemic has also worsened conditions that lead to human trafficking. In the latest advisory, FinCEN noted that traffickers often target the most vulnerable and that “support structures for potential victims collapse” amid the pandemic. Furthermore, shelter-in-place orders and other limits placed on travel may have affected typologies and red flag indicators.   

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10 new red flags of human trafficking

In the new advisory, FinCEN identifies ten new red flag indicators. These new red flags are not a replacement for the 2014 guidance. Rather, these indicators build off of the 2014 guidance, which remains relevant. According to the newly identified red flags, BSA Officers should look for:

  1. Frequent movement through – and transactions from – different geographic locations;

  2. Inconsistent transactions that do not align with the customer’s expected activity, indicating an effort to cover trafficking victims’ living costs, such as hotels, transportation costs, clothing, medical costs, and other grocery costs.

  3. Large deposits by a business occurring outside of typical business hours, often made in cash

  4. Frequent cash deposits made without Automated Clearing House (ACH) payments

  5. Consistent purchase of – and use of – prepaid access cards

  6. Shared identifiers, such as phone number, email, or address, with customer’s account and those associated with escort agency websites or commercial sex advertisements

  7. Frequent interaction with online classified sites based in foreign jurisdictions

  8. Frequent transmission of funds or received funds through cryptocurrency or from Dark Web markets associated with criminal activity

  9. Recurrent transactions that have concealed the originator’s or beneficiary’s identity of the transactions via third-party payment processors

  10. Avoidance of transactions that involve identification documents or that prompt reporting requirements

Behavioral indicators of human trafficking

Often, victims of human trafficking do not regularly interact with anyone outside of their traffickers. Therefore, when a victim visits a financial institution, it may be the only outside contact they have, making it critical that frontline staff is properly trained on behavioral indicators when conducting their transactions. When appropriate, this information should also be included in a suspicious activity report (SAR) filings and reported to law enforcement. Be sure to note the specific indicators, as well as the staff that witnessed the behaviors. Many of these behaviors include the presence of a third party, where this person may:

  • Speak on behalf of the customer
  • Insist on being present throughout the entirety of the transaction
  • Attempt to fill out paperwork without discussing it with the customer first
  • Keep ahold of all of the documents or funds
  • Claim to be related to the customer (but may lack knowledge of the customer’s important details)
  • Try to open an account for an unqualified minor
  • Act aggressive or intimidating toward the customer

Staff may encounter a prospective customer using – or attempting to use – the identification of another party that isn’t present to open up an account, which is another telling behavioral indicator. FinCEN also notes important physical and visual characteristics that can indicate the customer may be a victim of human trafficking. The customer may show signs of poor hygiene, malnourishment, or signs of physical abuse. Victims could might also display a lack of knowledge about their personal details or provide inconsistent stories when prompted by the staff.

Financial institutions play a large role in identifying and thwarting human trafficking schemes. From frontline staff identifying behavioral indicators to BSA Officers recognizing suspicious red flags in transaction activity, there are many areas within the financial institution that can detect and report suspicious activity to impede human trafficking schemes. If your financial institution suspects a possible human trafficking incident, FinCEN encourages financial institutions to file a SAR, using the term “Human Trafficking FIN-2020-A008,” and check the SAR Field 38(h) on the form.

Kylee Wooten, Content Marketing Manager at Abrigo, also contributed to this article. 

About the Author

Terri Luttrell, CAMS-Audit

Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size. She has successfully worked with institutions in developing BSA/OFAC programs, optimizing various automated solutions, and streamlining processes while ensuring all regulatory requirements are met. As the Compliance and Engagement Director at Abrigo, Terri provides insights that contribute and support long-term banking strategies based on analysis of market and industry trends, competitor developments, and financial and regulatory technology changes. She is an audit-certified anti-money laundering specialist and a board member of the Central Texas chapter of the Association of Certified Anti-Money Laundering Specialists (ACAMS). Terri earned her bachelor’s degree in business administration, specializing in business and finance, from the University of North Texas.

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