FinCEN presents human trafficking red flags to financial institutions


On October 15, the Financial Crimes Enforcement Network (FinCEN) published a END-2020-A008 describing new financial and behavioral indicators, as well as updated typologies, to help financial institutions identify human trafficking. The opinion highlights four specific typologies that human traffickers can use to evade detection and launder illicit proceeds: i) front companies which may appear to hold legitimate registrations and licenses; (ii) abusive employment practices; (iii) funnel accounts used to transfer funds between geographies, often in amounts below the cash reporting threshold; and (iv) other payment methods, including payments by “credit cards, prepaid cards, mobile payment applications and convertible virtual currency”. The notice includes examples that financial institutions should watch out for, such as multiple employees receiving salaries in the same account or payments that are immediately withdrawn or transferred to another account. FinCEN also notes that human traffickers use third-party payment processors to transfer funds in order to disguise the true originator or beneficiary. While the notice includes a specific list of warning indicators, FinCEN warns financial institutions to consider additional behaviors, both behavioral indicators and financial indicators in determining whether a transaction can be associated with the transaction. trafficking in human beings. Financial institutions reporting human trafficking in a suspicious activity report should reference the notice in the appropriate fields to indicate a link between the activities involved in the SAR and those described in the notice.

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