Disrupting Human Trafficking: The Role of Financial Institutions

Ever since someone planted the idea in my head that financial bankruptcy for a trafficker is a greater deterrence than criminal deterrence which is dependent on the slow pace of the justice delivery system, I have begun reflecting on the role of banks and financial institutions aided by technology and Artificial Intelligence in combating human trafficking.  My thinking has largely been shaped by groups like Liberty Share who work and act extensively on the issue and my own interest in exploring the beneficial uses of technology in nation-building.

As we know, today technology allows people to do more in a second than one could have imagined. With a few clicks, money can be transferred, we can search billions of websites, and messages can be sent in real-time across the world. Access to knowledge, people and resources is truly within the touch of a screen. While these advances have greatly improved the lives of billions, they have also made it simpler for criminals to launder money and traffic people. As a $150 billion dollar “industry,” traffickers rely on banks at each step of their value chains. From capturing a victim to monetizing her or his labour, traffickers are constantly transferring and storing funds.

Police leading labourers outPolice rescuing victims of labour trafficking from Odisha from a brick kiln in Bengaluru

Financial institutions (FI) are uniquely situated to disrupt these value chains – if committed to doing so and this requires systems than the minimal, legally mandated KYC processes.  To do it effectively, this requires a shared infrastructure that can detect the techniques traffickers employ. Traffickers are experts at evading detection by becoming familiar with banks’ automated systems and discovering ways to work around them. The only way for banks to take quantifiable steps to catch and stop traffickers is by investing in and digitizing their collaboration. Thereby, they can expose suspicious activity with the speed needed to match the traffickers.

Financial institutions can start by stepping up their efforts to identify traffickers, who depend on banks to conduct their operations (which is pretty much everyone!). Without bank accounts, traffickers would have to carry physical cash, which is inconvenient. Also, having piles of cash could make them prime targets for other criminals. However, by using banks, traffickers leave behind a lot of footprints. For example, traffickers may use so-called “funnel” accounts to transfer large sums of money quickly. In this scenario, money is deposited in an account and then quickly withdrawn from another location. Other footprints include credit card transactions late at night or very early in the morning, purchases on certain classified ad sites, and use of relatively anonymous payment methods like digital wallets.

Banks can program their systems to automatically flag such behavior. And if forensic reviewers ultimately confirm the patterns are suspicious, banks can alert law enforcement. Once specially trained investigators are armed with these clues, they can follow the money trail.  This is where Artificial Intelligence comes in. AI can track patterns and trails that aren’t easily identified by legacy technologies. For instance, professional investigators say that the lack of information is often an important challenge. This is a type of anomaly that an AI can pick up on. The ability to sort through and analyze distinct sets of data, from numerous sources, to identify patterns, the anomalies to those patterns, and determine whether those anomalies indicate something requiring further investigation is a specific capability. Financial forensics” is an especially important tool because it can identify—and help secure convictions against—traffickers without having to rely solely on victims, who are often unable or unwilling to testify out of fear of or emotional attachment to their traffickers

Closer collaboration, however, is needed to explore how financial activities, such as payments link to victim experiences. The opportunity exists for NGOs to better understand the type of information financial institutions require to identify activity linked with human trafficking, and for financial institutions to better speak about how the problem shows up in the financial system. Financial institutions and NGOs both need to dedicate resources and maintain effective tools to accelerate this effort.

By Shantanu Dutta

Shantanu Dutta is a former Air Force Doctor and now works in the NGO sector


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