Human Trafficking and Money Laundering

What is human trafficking?

According to the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children by the United Nations Convention Against Transnational Organised Crime, ‘human trafficking’ is defined as: 

The recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation.  

“Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs.” 

Effects of human trafficking on society. 

It is also imperative to mention that not all types of human trafficking are denoted as ‘evil’ – such as migrant smuggling. This type of trafficking blankets over the smuggling of people to a new country to escape due to:  

• poverty  
• unemployment/ lack of opportunities 
• conflicts and violence. 

Due to these reasons, being smuggled might be the only viable way for survival. Nonetheless, smugglers are still to be facilitating criminal activity, contributing to money laundering enterprises.  

Human trafficking is far reaching beyond the victims exploited directly during the incident. In addition to psychological and physical harm done upon the victims, the act of human trafficking funds criminal enterprises which are more than likely also involved in other types of crimes, such as drug crimes.  

What is the relationship between human trafficking and money laundering?

There is a direct relationship between human trafficking and money laundering. Human trafficking is a profitable enterprise for criminals, often yielding sizeable assets.  

According to a 2018 FATF report titled ‘Financial Flows from Human Trafficking, human trafficking is estimated to be one of the most profitable proceeds generating crime in the world, with the International Labour Organisation estimating that forced labour generates USD $150.2 billion per year.

As a result, money laundering is most often a consequence of human trafficking as there needs to be a way for unaccounted money to be introduced into the financial system. 

Warning signs of money laundering in relation to human trafficking crimes.

The Financial Action Task Force has released a study in 2018 investigating how money laundering and human trafficking crimes are related which culminated in a report titled ‘Financial Flows from Human Trafficking.’ This report updates the previous FATF study published in 2011 entitled ‘Money Laundering Risks Arising from Trafficking of Human Beings and Smuggling of Migrants.’ 

According to Financial Flows from Human Trafficking, a 2018 FATF report, the number of victims of human trafficking and migrant smuggling has continued to grow significantly.

In the most recent 2018 report, the FATF lists indicators to watch for various types of human trafficking crimes. 

Why care about human trafficking?

Human trafficking harms fellow human beings in addition to further propagating transnational crimes including money laundering and drug crimes.  

Policies regarding human trafficking should be more stringent in order to prevent money laundering crimes which will further fund other criminal activities.

Preventing and catching instances of money laundering means intercepting human trafficking cases and preventing other crimes by blocking funds to commit other crimes.  

With DX Compliance, your institution can play the part in catching instances of money laundering, further preventing crimes detrimental to all aspects of society.