Written by Mackenzie Martinez
This blog series dives into the many avenues traffickers follow to hide their crimes and highlights criminal cases that illustrate such efforts. Some methods have long been utilized, while others are just beginning to emerge. Understanding how human traffickers exploit international economics will help inform how we can most effectively follow the money to fight slavery. All of the information from his blog series comes from Louise Shelley’s “Human Trafficking and the International Financial System,” which can be found here (link).
Cryptocurrency is a digital currency that is becoming increasingly coveted by criminals for its untraceable nature. Examples include Bitcoin, the world’s most popular cryptocurrency, Ethereum, and Dogecoin. Cryptocurrencies are used by traffickers to purchase advertisements and by sex buyers to purchase premium memberships on review board websites. FinCEN has issued warnings of traffickers using multiple layers of payment along with cryptocurrency to protect their identities, as demonstrated in the second case study.
Case Study: Welcome to Video
Human traffickers make hundreds of thousands of dollars at a minimum annually from the exploitation of children. The website Welcome to Video, which was a platform for child sexual abuse material (CSAM) on the dark web, handled membership through a cryptocurrency-based points system: in order to view more videos, members were required to either upload their own new content (gaining points for the number of views from other members), or to pay for new videos using bitcoin. Welcome to Video was shut down by federal authorities in 2018, but numerous sites have subsequently developed as replacements.
Case Study: West Side City Crips and Payment Layering
In April 2016, members of the West Side City Crips gang from Phoenix, Arizona were discovered to be trafficking women out of a motel in El Paso, Texas. Homeland Security Investigations found evidence through one gang member’s mobile phone and bitcoin wallet that the group was purchasing Vanilla Visa prepaid credit cards, using these prepaid cards to purchase bitcoin, and using those bitcoin to purchase sex ads on Backpage. Such payment layering adds to the difficulty of tracing criminal activity.
In a range of cases, both in the United States and abroad, the proceeds of trafficking operations have been located in banks. Perpetrators can exploit the vulnerabilities in banking systems to assist in the economics of human trafficking. For this reason, it is essential that financial institutions practice social corporate responsibility and track suspicious account activity. In some extreme cases, the banks themselves can deliberately aid in the facilitation of criminal activity. Banks can enrich their anti-human trafficking toolkits with ATII’s large database containing known criminal activity and patterns of trafficking in finance.
Case Studies: Various Banking Scandals
In a California investigation, fifty different accounts were used to launder the proceeds of human trafficking. More recently, in July 2020 Deutsche Bank agreed to pay a $150 million penalty to the New York State Department of Financial Services “for significant compliance failures in connection with the Bank’s relationship with Jeffrey Epstein”, as well as Danske Estonia and FBME Bank, both entrenched in money laundering scandals at the time.
Credit cards are often used to pay for online advertisements for sexual services. The name of the payee is often disguised so as not to arouse suspicion from payment processors, especially since the passage of the FOSTA-SESTA acts. In some instances, traffickers can utilize their victim’s identities to gain access to credit cards.
Case Study: The Efforts of FCACP
The Financial Coalition Against Child Pornography (FCACP) works with The National Center for Missing & Exploited Children (NCMEC), and its sister agency, the International Centre for Missing & Exploited Children (ICMEC). FCACP is a coalition of credit card issuers and Internet service companies that seeks to eliminate commercial child pornography by acting on the payment systems that are used to fund these illegal operations. Many of the payments for the purchase of child pornography have been made through credit cards, making the work of this coalition significant.
To help organizations recognize various risks of human trafficking and child sexual abuse material within their line of work, ATII has developed two inter-connected consortiums. The Anti-Human Trafficking Cryptocurrency Consortium (ATCC) is comprised of crypto exchanges, crypto kiosk suppliers and data companies. The Anti-Human Trafficking Retail Consortium (ATRC) brings together risk management leaders from large retail corporations such as Walmart, BestBuy and Target. Both consortiums were developed to foster cross-industry communication and to share resources to combat human trafficking where they can, including in their compliance programs, trainings, and high-risk trafficking and crypto wallet data. For more information, see these flyers for ATCC (link) and ATRC (link).
This blog post detailed how human traffickers utilize cryptocurrencies, banks, and credit cards to facilitate their crimes. These methods, especially they use of crypto, are quickly advancing alongside technological evolution. The next post dives into the various forms of money laundering used for trafficking activity.