Recognizing human trafficking red flags can save lives

Global Fraud Focus: Examining cross-border issues

In previous columns, we've reported on global crimes that target the vulnerable. Once again, we find evil and vicious criminals exploiting the most susceptible in our society via human trafficking.

We must be able to identify the red flags of trafficking and be vigilant and swift to report our suspicions. Human trafficking can happen before your eyes, and you might not realize it. Often the victims are unable or unwilling (for fear of reprisal) to go to authorities to seek help, and some don't consider themselves to be victims, which can hinder prosecutions.

When teenager Melissa ran away from home, a man she met promised her help. But he was actually a pimp who intended to sexually exploit her. He used psychological manipulation and coercion to hold her in prostitution and advertised her services online. He beat her when she refused to cooperate.

This actual U.S. victim, included in the U.S. Department of State's report Trafficking in Persons 2014, is one of thousands of victims around the world who are trafficked every year in this growing fraudulent trend. (Also see In the Name of ‘Progress': Fraudulent Human Labor Trafficking within U.S. Government Contracts, by Sindhu P. Kavinnamannil, CFE, with Sam W. McCahon, J.D., LLM, May/June 2011 Fraud Magazine.)

In another case, Stepan Botsvynyuk was sentenced to 20 years in Philadelphia for a seven-year conspiracy to smuggle Ukrainian nationals into the U.S., according to the July 17, 2012, FBI release, Second Ukrainian Brother Sentenced to the Maximum for Human Trafficking Operation. 

Botsvynyuk, and his family-run human trafficking organization, promised young Ukrainian immigrants good jobs — making $500 per month with another $200 to $300 for expenses — along with room and board. They instead controlled them with threats of physical force, sexual assault and debt bondage. After some immigrants escaped, Botsvynyuk threatened their families in Ukraine with mutilation, rape and death if the workers didn't return to work.

"The evidence and testimony presented at trial," said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger, "painted a picture of the defendants' depravity and inhumane treatment of their victims," according to the July 16, 2012, FBI release, Ukrainian National Sentenced in Pennsylvania to Life in Prison for Human Trafficking Operation. Memeger describes their plight as a "living nightmare." The predators put the immigrants to work cleaning offices and shops of some well-known large retail chain stores.

The Global Freedom Center reported that law enforcement uncovered this human trafficking case — not the employees, patrons or subcontractors at the companies where they worked. (See the "Ukraine-USA" case in True Accounts of Human Trafficking, Global Freedom Center.)

"Human trafficking and forced labor," said FBI Philadelphia Division Special Agent in Charge George Venizelos, "is one of the largest and fastest growing criminal enterprises globally and is a modern form of slavery." (See the July 16, 2012, FBI release.)

A web search reveals harrowing stories from victims from around the world. No country is immune from this barbaric practice. "We each have a responsibility to make this horrific and all-too-common crime a lot less common," says U.S. Secretary of State John F. Kerry in a letter accompanying the State Department's Trafficking in Persons Report 2014.

"And our work with victims is the key that will open the door to real change — not just on behalf of the more than 44,000 survivors who have been identified in the past year, but also for the more than 20 million victims of trafficking who have not."

The State Department's report says, "The United States is a source, transit, and destination country for men, women, and children — both U.S. citizens and foreign nationals — subjected to sex trafficking and forced labor, including domestic servitude. Trafficking can occur in both legal and illicit industries or markets, including in brothels, escort services, massage parlors, strip clubs, street prostitution, hotel services, hospitality, sales crews, agriculture, manufacturing, janitorial services, construction, health and elder care, and domestic service."

The U.K.'s National Crime Agency NCA Strategic Assessment – The Nature and Scale of Human Trafficking in 2013 reported that 1,095 people were victims of trafficking — an increase of 41 percent from 2012 — most of whom were trafficked for sexual exploitation. Eighty-eight percent of U.K. minors identified as potential victims had been sexually exploited — an increase of 250 percent over those reported in 2012.

The U.K.'s Home Office is introducing the Modern Slavery Bill — the first legislation in Europe dealing with the issue. The bill will create two new civil orders to prevent modern slavery, establish an anti-slavery commissioner and make provisions for the protection of victims.

The U.K. NCA report identified potential victims from 81 separate countries; the top three were Romania, Poland and the U.K. Traffickers recruit victims with promises of legitimate work. Male traffickers lure young, vulnerable, female victims with fake romantic relationships via dating and social media sites. They also supply them with drugs and alcohol.

The NCA in its report says that it has limited information on how much the traffickers sell their potential victims with figures ranging from 200 to 6,000 British pounds (about U.S. $320 to $9,600).

The report says traffickers use violence and physical abuse, rape and threats against victims' families and possibly might mark potential victims with tattoos of numbers and symbols that signify ownership or to show a victim is over 18.

Human smuggling vs. human trafficking

As CFEs, we need to inform the financial institutions with which we deal about the red flags they should look for. The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FINCEN) issued guidelines in September on recognizing activity that might be connected with human smuggling and human trafficking.

FINCEN defines human smuggling as "Acts or attempts to bring unauthorized aliens to or into the United States, transport them within the U.S., harbor unlawful aliens, encourage entry of illegal aliens, or conspire to commit these violations, knowingly or in reckless disregard of illegal status."

FINCEN defines human trafficking as "The act of recruiting, harboring, transporting, providing or obtaining a person for forced labor or commercial sex acts through the use of force, fraud or coercion."

In essence, human smuggling normally involves assisting willing individuals to illegally cross borders while human trafficking involves forcing or coercing victims into peonage, sex acts or forced labor. Traffickers don't need to cross borders to commit crimes.

Stages of human trafficking

According to FINCEN, human trafficking generally follows these stages:

Recruitment or abduction
"Traffickers obtain their victims through deception or force. For instance, traffickers may recruit victims through the use of kidnapping, false marriages or advertisements offering employment or study abroad. Individuals from countries and geographic areas that have been affected by economic hardship, armed conflicts or natural disasters are particularly vulnerable to these tactics."

Transportation
"After being collected, victims are transported to locations where they are exploited or sold to other traffickers. Victims may originate from abroad or within the United States and may be transported by air, sea and/or land domestically or internationally."

Exploitation
"During this stage, traffickers profit from exploiting victims through forced labor, sexual exploitation, involuntary participation in crimes or other activity. Businesses in the service and manual labor industries (e.g., massage parlors, restaurants, farms, construction companies, domestic services) have been frequently used to exploit trafficked individuals. In contrast to the one-time illicit proceeds of human smuggling, this final phase of human trafficking may generate ongoing criminal proceeds."

Red flags flying

Here are some of the human trafficking red flags that FINCEN lists:

Substantial deductions to wages. "To the extent a financial institution is able to observe, a customer with a business may deduct large amounts from the wages of its employees alleging extensive charges (e.g., housing and food costs), where the employees only receive a small fraction of their wages; this may occur before or after the payment of wages."

"The following two red flags may signal anomalous customer activity; however, they should be applied in tandem with other indicators when determining whether transactions are linked to human trafficking:

• Transactional activity (credits and/or debits) inconsistent with a customer's alleged employment, business or expected activity, or where transactions lack a business or apparent lawful purpose."
• "Cash deposits or wire transfers are kept below [U.S.] $3,000 or $10,000 in apparent efforts to avoid record keeping requirements or the filing of Currency Transaction Reports (CTRs), respectively."

Frequent outbound wire transfers, "with no business or apparent lawful purpose, directed to countries at higher risk for human trafficking or to countries that are inconsistent with the customer's expected activity."

Multiple, apparently unrelated, customers sending wire transfers to the same beneficiary. "These wire senders may also use similar transactional information including but not limited to a common address and phone number. When questioned to the extent circumstances allow, the wire senders may have no apparent relation to the recipient of the funds or know the purpose of the wire transfers."

Transactions conducted by individuals, escorted by a third party, "(e.g., under the pretext of requiring an interpreter), to transfer funds (that may seem to be their salaries) to other countries."

Your hesitation could hurt lives

As vigilant CFEs and responsible global citizens we must be aware of red flags that will point to human traffickers and their victims of these grotesque crimes. We shouldn't be afraid of reporting our suspicions to authorities. Most of the victims can't help themselves, so we should.

Tim Harvey, CFE, JP, is director of the ACFE's UK Operations and a member of Transparency International and the British Society of Criminology.

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