Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking, Financial Red Flags

Advisory Information
FIN-2014-A008
Issued Date
Subject
Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking — Financial Red Flags

To support law enforcement efforts to fight human smuggling and human trafficking, the Financial Crimes Enforcement Network (FinCEN) seeks to advise financial institutions on how to detect and report suspicious financial activity that may be related to human smuggling and/or human trafficking. 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.

FinCEN, in collaboration with law enforcement agencies, non-governmental organizations and members of the financial industry, has identified financial indicators, or “red flags,“ that may indicate financial activity related to human smuggling or human trafficking. In addition to identifying red flags, this advisory provides common terms that financial institutions may use when reporting activity related to these crimes. The use of common terms will assist law enforcement in better identifying possible cases of human smuggling or human trafficking reported through Suspicious Activity Reports (SARs).

Human Smuggling

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.1

Human Trafficking

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.2

Difference between Human Smuggling and Human Trafficking

Human Smuggling

(i) Involves persons choosing to immigrate illegally.
(ii) Is limited to illegal migration or the harboring of undocumented aliens.
(iii) Involves foreign nationals.
(iv) The crime involves an illegal border crossing or the harboring of someone that illegally crossed the border.

Human Trafficking

(i) Involves the use of force or coercion and the exploitation of victims.
(ii) Includes, but is not limited to, involuntary servitude, forced labor, debt bondage, peonage and sexual exploitation.
(iii) Anyone can be a victim regardless of origin, sex, age or legal status.
(iv) There is no need for a person to cross a border to be trafficked; individuals can be trafficked within the borders of a country.

How to Identify Human Smuggling and Human
Trafficking Transactions

To help identify and report transactions possibly associated with human smuggling and human trafficking, FinCEN has identified a number of red flags (see Appendices A and B) that financial institutions may consider incorporating into their monitoring programs. In applying these red flags, financial institutions are advised that no single transactional red flag is a clear indicator of human smuggling or trafficking-related activity. Accordingly, financial institutions should consider additional factors, such as a customer’s expected financial activity, when determining whether transactions may be associated with human trafficking.

The red flags described in Appendices A and B may be associated with one or more of the stages of human smuggling or trafficking described above and may be considered by all financial institutions. Some red flags may be common to several types of financial institutions (e.g., banks, money transmitters, credit unions) while other red flags may be unique to a specific type of financial institution. Appendices A and B describe the human smuggling/trafficking stages and/or types of financial institutions most closely associated with each red flag.

In order to more effectively evaluate transactional activity, financial institutions may consider reviewing transactions at the relationship level rather than at the account level. Relationship level reviews allow financial institutions to analyze a customer’s transactions across multiple accounts instead of reviewing transactions that are conducted solely through one account. This approach may also be applied when monitoring for any type of suspicious activity to offer financial institutions a more comprehensive perspective on the customer’s behavior and activity.

Finally, direct interactions by branch or floor personnel with customers during the course of daily transactions can also alert financial institutions to human smuggling or trafficking-related activity. In many cases, smugglers and traffickers and/or their victims may hold accounts or receive services from financial institutions. Observations made by branch or floor personnel can lead to the identification of anomalous activity that could alert a financial institution to initiate a review of a customer’s transactions.

Questions or comments regarding the contents of this or any other advisories should be addressed to the FinCEN Resource Center at (800) 767-2825 or (703) 905-3591. Financial institutions wanting to report suspicious transactions that may relate to terrorist activity should call the Financial Institutions Toll-Free Hotline at (866) 556-3974 (7 days a week, 24 hours a day). The purpose of the hotline is to expedite the delivery of this information to law enforcement. Financial institutions should immediately report any imminent threat to local-area law enforcement officials.

1See, 8 U.S.C. § 1324.
2See generally, 18 U.S.C. §§ 1581, 1584, 1589, 1590, 1591, 24121, 2422, 2423 and 2425, The Victims of Trafficking and Violence Protection Act of 2000 (Pub. L. No. 106-386), applicable State laws and the President’s Interagency Task Force — Progress in Combating Trafficking in Persons: The U.S. Government Response to Modern Slavery .
3To view the industry sectors particularly vulnerable to human trafficking, please see the U.S. Department of State Trafficking in Persons Annual Report and the July 2011 FATF Report: Money Laundering Risks Arising from Trafficking in Human Beings and Smuggling of Migrants .
4See, FinCEN (May, 2014) Advisory FIN-2014-A005 for a detailed description of funnel accounts.
5Pub. L. No. 107-56, § 314(b). See also, 31 CFR 1010.540.
6For further guidance related to the 314(b) Program, please see FinCEN’s Section 314(b) Fact Sheet and FIN-2009-G002 (June, 2009), Guidance on the Scope of Permissible Information Sharing Covered by Section 314(b) Safe Harbor of the USA PATRIOT Act.
7Financial institutions may include any relevant key terms in the “Other” fields of items 29 through 38, as applicable, of Part II (Suspicious Activity Information) of the SAR.

 

 

APPENDIX A

 

 

Human Smuggling Red Flags

Financial institutions may choose to use this appendix as a handout for their investigations staff and/or branch personnel. No one transaction or red flag by itself is a clear indicator of human smuggling; accordingly, financial institutions may consider applying these red flags in combination with other factors, such as a customer’s profile and expected transaction activity.

 

1The Southwest Border is generally described as the U.S. – Mexico land border.
2See, FinCEN (May, 2014) Advisory FIN-2014-A005 for a detailed description of funnel accounts.
3See, FinCEN (May, 2014) Advisory FIN-2014-A005 for a detailed description of funnel accounts.
4See, FinCEN (April, 2006) Advisory FIN-2006-A003 for a detailed description of repatriation of currency smuggled into Mexico from the United States.

 

 

 

APPENDIX B

 

 

Human Trafficking Red Flags

Financial institutions may choose to use this appendix as a handout for their investigations staff and/or branch personnel. No one transaction or red flag by itself is a clear indicator of human trafficking; accordingly, financial institutions may consider applying these red flags in combination with other factors, such as a customer’s profile and expected transaction activity.

https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2014-a008

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