October 27, 2020
The Financial Crimes Enforcement Network’s latest advisory on identifying human trafficking (HT) illustrates how crucial the principle of “following the money” is when investigating pimps and the complex online networks that often support their heinous enterprise.
Last month, the Treasury’s financial intelligence arm modernized its transaction-monitoring guidance to help covered financial institutions combat an industry that mints slave traders $150 billion worldwide per year.
Globally, pimps ply their trade by kidnapping their victims, coercing them into drug addiction, ‘sextorting’ them with compromising photos, and duping them into exploitative employment arrangements.
Unlike the brothel-laden backstreets of Southeast Asia, Eastern Europe, and Latin America, however, America’s sexual slavery epidemic largely proliferates online via escort sites, dating apps, and even social media apps.
Around the world, sexual offenders are prone to leaving digital clues (among them incriminating evidence) on social media posts and classified ads that market their victims.
Thus, when investigated properly and with the right technology, these online platforms can yield a trove of web intelligence (WEBINT) and financial intelligence (FinTel) for investigators.
Coined by a trio of academic researchers in Asia and Canada 20-years ago, WEBINT is a term that refers to the use of artificial intelligence (AI) and advanced information technologies to optimize data-scraping.
Today, WEBINT is used to mine insight from all three dimensions of the Internet – surface, deep, and dark. When combatting trafficking, the disciplines of WEBINT and FinTel frequently overlap because traffickers have the overtly ‘Millennial’ tendency of flaunting lifestyle habits and other activities on social media.
The latest typologies highlighted by FinCEN include front companies, exploitative employment practices, funnel accounts, and alternative payment methods. “Human traffickers routinely establish and use front companies, sometimes legal entities, to hide the true nature of a business, and its illicit activities, owners, and associates,” notes FinCEN.
The Treasury’s financial intelligence unit also writes that HT front establishments typically appear “legitimate with registrations and licenses.” Frequently, these “establishments will appear to be a single storefront, yet are part of a larger network,” advises FinCEN.
As for common exploitative employment practices perpetrated by HT conspirators, FinCEN says that “seemingly legitimate businesses” will engage in “visa fraud and wage retention, to amass profit from labor and sex trafficking.”
Furthermore, FinCEN cites the use of funnel accounts, where mules deposit money below transaction reporting thresholds in one geographic area, only for it to be withdrawn in another region, “with little time elapsing between the deposits and withdrawals.”
Most vexing for law enforcement, however, are the rise of alternative payment methods like prepaid cards, mobile payment applications, cryptocurrencies, and third-party payment processors (TPPPs).
FinCEN advises that ‘Johns’ frequently use prepaid cards, which can be acquired anonymously with cash or on the dark net, “to register with escort websites and to purchase sexual services, flights, throw-away phones, and hotel rooms.”
Threat actors also exploit crypto to purchase and post commercial sex advertisements for their captives online. FinCEN notes established HT tradecraft where sophisticated traffickers have used prepaid cards to purchase crypto on peer-to-peer exchanges like Paxful and Local Bitcoins, for example.
With this P2P-sourced crypto, which was much even more difficult to trace prior to Western authorities’ crackdown on Know Your Customer gaps, sex traffickers have purchased online ads and virtually masked their online footprint, stifling blockchain analysis and related forensic probes.
Also complicating trafficking probes is the use of TPPPs. These third-party services give the “appearance that the TPPP is the originator or beneficiary of the wire transfer and conceals the true originator or beneficiary,” according to FinCEN.
FinCEN advises that traffickers are known to “facilitate payments via TPPPs for the operation of online escort services and online streaming services that use voice-over Internet protocol technology.” These services have been used by traffickers to wire funds to HT-linked businesses domestically and abroad, notes FinCEN.
From a WEBINT standpoint, two of FinCEN’s updated financial indicators are also particularly relevant. In the first case, FinCEN advises that AML analysts should be suspicious of customers who “frequently appear to move through, and transact from, different geographic locations in the United States.”
AML investigators should cross-reference customers that exhibit this behavior with “with travel and transactions in and to foreign countries that are significant conduits for human trafficking,” advises FinCEN.
Secondly, FinCEN highlights how HT networks will frequently reuse common identifiers. The watchdog advises AML staff to be vigilant for customer accounts that share common contact data inputs, “such as a telephone number, email, and social media handle, or address, associated with escort agency websites and commercial sex advertisements.”
Pursuant to their latest HT advisory, FinCEN has highlighted a new field (SAR Field 38(h)) in their suspicious activity reporting (SAR) template designated specifically for “human trafficking.” The financial intelligence watchdog advises covered institutions to include “email addresses, phone numbers, and IP addresses” in SARs where sex trafficking is suspected.
Liberating the Enslaved
Faced with this unfathomable evil, investigators have turned to WEBINT technologies to turn the tables on traffickers. Specifically, WEBINT can identify traffickers patterns and behaviors through social media and other channels publicly available to online investigators.
Beyond the surface web, which consists of standard web queries on browser engines like Google, and the deep web that comprises chatter on social media and various peer-to-peer forums, WEBINT tools extend beyond the reach of commercial search engines into the ‘dark.’
In a fluid digital HT economy, where traffickers regularly migrate to new escort sites, online “hobbyist” forums, and mobile dating apps, first-generation, anti-trafficking WEBINT tools which are constantly updated with the latest channels and sources are crucial.
At Cobwebs, we have operationalized WEBINT to help financial institutions freeze the liquidity streams that fund human slavery and bring traffickers to justice. At the dawn of FinCEN’s new HT regime, artificial intelligence, advanced cognitive analytics, real-time monitoring, analyst-friendly design will be vital in the AML community’s mission to liberate the enslaved.