The Financial Crimes Enforcement Network (FinCEN) issued an advisory (FIN-2014-A008) informing financial institutions how to detect and report suspicious financial activity that might be related to human smuggling and/or human trafficking.
Human smuggling involves the illegal migration or harboring of undocumented aliens.
Human trafficking involves the use of force or coercion and the exploitation of victims; it includes, but is not limited to, involuntary servitude, forced labor, debt bondage, and sexual exploitation.
“Financial institutions, large and small, can play a critical role in identifying and reporting transactions related to these unlawful activities based on their observations when interacting with customers and their monitoring processes,” the FinCEN advisory states.
The advisory identified a number of financial indicators, or “red flags” that might point to financial activity related to human smuggling and/or human trafficking. For example:
• Money flows that don’t fit common remittance patterns: wire transfers that originate from countries with high migrant populations directed to beneficiaries located in a U.S or Mexican city along the southwest border.
• Transactions conducted by individuals, escorted by a third party (e.g., under the pretext of requiring an interpreter), to transfer funds that seem to be their salaries to other countries.
• A business account that doesn’t exhibit normal payroll expenditures (e.g., wages, payroll taxes, Social Security contributions). Payroll costs might be nonexistent or extremely low for the size of the business, workforce, and/ or business line or model.
Credit unions should evaluate these indicators of human smuggling/ trafficking in combination with other red flags and factors (such as expected transaction activity) before determining whether to file a Suspicious Activity Report (SAR).
No single transaction or red flag clearly indicates human smuggling or trafficking.
The advisory also provides common terms institutions may use on SARs when reporting activity related to these crimes.
FIN—2014-A008: “Guidance on Recognizing Activity That May be Associated With Human Smuggling and Human Trafficking— Financial Red Flags” is available at fincen.gov.