Monday, April 19, 2021

How Human Traffickers Launder Proceeds


Human trafficking remains a lucrative business, as a Wall Street Journal article shows while detailing how companies in Russia continue to import workers from North Korea in apparent violation of United Nations sanctions.

What is happening with workers from North Korea is happening to workers around the world, according to a report released this week by the Financial Action Task Force and the Asia/Pacific Group on Money Laundering. The report also looks at how proceeds from trafficking are being laundered.

As human trafficking can happen anywhere, countries must assess how they are at risk of human trafficking and the laundering of the proceeds of this crime, share this information with stakeholders and make sure that it is understood, an FATF spokeswoman said. “There have been some good initiatives at [the] regional and national level, but globally countries need to do more to focus on this,” she said.

FATF cited a statistic from the International Labor Organization that found the proceeds generated through human trafficking increased $150 billion in 2017, a fivefold jump from $32 billion the FATF calculated in its 2011 report.

For example, local developers in Russia said they pay companies that hire out North Korean workers–firms they say often represent North Korean institutions such as the military or state conglomerates–about 100,000 rubles ($1,600) a month per worker.

In government filings and job advertisements, such companies list monthly worker salaries of 16,000 to 20,000 rubles. That 80% difference is in line with U.S. assessments that North Korea’s government takes the bulk of earnings.

The report breaks down the proceeds from three types of trafficking: moving people for forced labor, for sexual exploitation or for the removal of their organs. It explains how each type of trafficking has its own way of laundering money.

“In many cases, the victims are being used to help the traffickers launder the funds,” said the FATF spokeswoman. “We see many traditional money laundering techniques being used to maintain the anonymity of the traffickers.”

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The report provides useful indicators to help detect behavior that could indicate a human-trafficking situation, such as accounts that are funded primarily via cash deposits or a client who makes deposits accompanied or watched by a third party and avoids face-to-face contact with bank staff. It recommends ways regulators, banks and others could shore up their AML activities to combat these laundering methods.

Among the suggestions:

  • Partnerships between the public sector, private sector, civil society and nonprofits to help detect and prevent human trafficking and money laundering; and
  • Better coordination within government between those combating human trafficking and those combating financial crime to ensure the full range of financial analysis tools are used to help detect human-trafficking networks.

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