Human Trafficking Scam Trade preys on vulnerable individuals trapping victims in a web of human trafficking, coercion, fraud, and cryptocurrencies. Our new publication, in collaboration with The Mekong Club, Anti-Human Trafficking Intelligence Initiative, and Humanity Research Consultancy, sheds light on the shocking tactics used by criminal networks and highlights the complexities surrounding detection and prevention. Discover the hidden tactics involving fraud, money laundering, human trafficking, and cryptocurrencies, and learn how you can prevent this critical issue.
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In the fight against modern slavery and trafficking, the private sector plays a crucial role as it serves as the primary channel for 70% of the flows of illicit activities. Money is at the core of this insidious crime, flowing in and out of different countries through various channels. Modern-day slavery generates an estimated US$150 billion in profits each year, a significant portion of which is being funnelled into the global financial system.
The financial services industry, being at the forefront of this system, has a unique opportunity to detect suspicious activities and trends associated with money laundering and slavery.
Proper training can empower this industry to identify new forms of financial fraud, thereby reducing the risks associated with illegal and fraudulent businesses. As such, the financial services industry can take a proactive stance in the fight against modern slavery and trafficking.
According to estimates by the United Nations Interagency Project on Human Trafficking (UNIAP), someone becomes a victim of modern slavery every four seconds, with the criminal industry that fuels this practice earning over US$285,000 every minute. These statistics highlight the alarming scale and global reach of modern slavery and trafficking, which reduces human beings to mere commodities.
These crimes are not confined to any specific geographic region or industry; rather, they are prevalent across supply chains and affect individuals in both developed and developing nations.
The immense profits generated by modern slavery and human trafficking make it one of the world’s most lucrative criminal enterprises, second only to the drug trade. These profits are derived from the exploitation of an estimated 50 million people, making it a highly pervasive industry.
Due to its reliance on access to financial institutions, modern slavery and trafficking represent not only a destination for illicit proceeds but also a conduit for financing the entire process. Financial institutions are increasingly recognising their pivotal role in combating modern slavery and trafficking and are actively exploring ways to disrupt the flow of money that sustains this practice.
While the goal of completely eradicating modern-day slavery may be unrealistic, efforts to cut off its financial lifeline must not falter. By limiting the funds that support these heinous practices, we can help reduce the prevalence of modern slavery and human trafficking.
Recognition of modern slavery and human trafficking issues linked to cryptocurrencies is an emerging trend first seen toward the end of 2022. Traditional financial institutions need to be aware of how this could be used to launder money, and more specifically how it’s linked to modern slavery and human trafficking. So, what are cryptocurrencies and how are they used to launder money?
Cryptocurrencies are a type of digital asset designed to work as a medium of exchange. They use cryptography to secure and verify transactions as well as to control the creation of new units. Since cryptocurrencies are decentralised and operate on a distributed ledger called the blockchain, this means that transactions are recorded across a network of computers, making them difficult to manipulate or hack. Although cryptocurrencies are commonly used for legitimate purposes such as purchasing goods and services, investing, and sending money to family and friends, they are also used for illicit
activities such as money laundering. Cryptocurrencies can be used to launder money because they offer a level of anonymity and can be easily transferred across borders without the need for intermediaries like banks.
A common method of using cryptocurrencies to launder money is called the ‘mixing’ process. Mixing involves combining funds from multiple transactions or wallets and then redistributing them to new wallets. This can make it difficult to trace the origin of funds and link them to criminal activity. Another method of using cryptocurrencies for money laundering is ‘tumbling’ services. Tumbling services are online platforms that offer to break up large cryptocurrency transactions into smaller ones, which are then sent to multiple recipients to obscure the original source of the funds.
Other methods include unregulated exchanges, peer-to-peer (P2P), prepaid cards, gaming sites and ATMs. Typically, with almost all the
methods mentioned, transactions from criminals can then be used to launder money by converting the cryptocurrencies into cash or other assets.
The methods mentioned above are just some of the tactics used to conduct the pig butchering scams that commonly emerge from the scamming compounds. Victims in the compounds are often recruited overseas via fake job advertisements, enticed by high salaries, free flights, dream jobs and the opportunity to experience a new country. However, upon arrival they will be trafficked to a compound and forced to defraud individuals worldwide, including those in the United States, Canada, Europe, and other developed nations. Those who refuse may be subjected to physical violence, food deprivation, electric shocks and consumption of illicit drugs to keep them from sleeping and continue scamming (Podkul and Lui, 2022).