Sanctions Programs Targeting Human Traffickers: In Brief April 22, 2021 Congressional Research Service https://crsreports.congress.gov R46771 Sanctions Programs Targeting Human Traffickers: In Brief Contents Introduction ............................................................................................................................... 1 Human Trafficking Sanctions .................................................................................................... 2 Sanctions with Human Trafficking-Related Designation Criteria ...................................... 3 Other Sanctions Targeting Persons Engaged in Human Trafficking ................................... 5 Congressional Outlook .............................................................................................................. 8 Contacts Author Information ........................................................................................................................ 10 Sanctions Programs Targeting Human Traffickers: In Brief his CRS In Brief describes the role of the U.S. Department of the Treasury (hereafter Treasury) in combating trafficking in persons, and addresses the extent to which sanctions programs administered by the department’s Office of Foreign Assets Control (OFAC) T 1 target foreign human traffickers. Introduction Human trafficking takes different forms, including forced labor, enslavement, the recruitment and use of child soldiers, and sex trafficking. Congress has sought to eliminate human trafficking including through enactment of the Trafficking Victims Protection Act (TVPA) of 2000 (Division A, P.L. 106-286, as amended), subsequent reauthorization acts, and related legislation.2 The United States is also party to the United Nations 2000 Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, to which the Senate provided its advice and consent on ratification in 2005. Since enactment of the TVPA, Congress has shown increasing interest in addressing the illicit finance dimensions of human trafficking. Advocates of such an approach argue that profit is one of the traffickers’ main motives, and thus that dismantling traffickers’ ability to profit financially has the potential to deter trafficking.3 According to the International Labour Organization, forced labor, including human trafficking, may generate more than $150 billion worldwide per year for traffickers.4 Treasury’s Role in Combating Human Trafficking In recent years, Treasury has played a growing role in addressing human trafficking concerns, due in part to congressional actions, such as the following: PITF Role. The President’s Interagency Task Force (PITF) to Monitor and Combat Trafficking, mandated by Section 105 of the TVPA (22 U.S.C. 7103) and established pursuant to Executive Order (E.O.) 13257 of February 13, 2002, is an interagency forum composed of Cabinet- and department-level officials that sets the federal agenda on all aspects of anti-human trafficking policy.5 In 2019, Section 201 of the Frederick Douglass Trafficking Victims 1 For additional CRS analysis of human trafficking-related issues, see CRS In Focus IF10587, Human Trafficking and Foreign Policy: An Introduction, by Liana W. Rosen and Michael A. Weber, and CRS Report R44953, The State Department’s Trafficking in Persons Report: Scope, Aid Restrictions, and Methodology, by Michael A. Weber, Katarina C. O'Regan, and Liana W. Rosen. 2 Section 103(11) of the Trafficking Victims Protection Act (TVPA) of 2000 (Division A, P.L. 106-286, as amended; 22 U.S.C. 7102) defines severe forms of trafficking in persons to mean “(A) sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such an act has not attained 18 years of age; or (B) the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery.” 3 See for example, U.S. Department of the Treasury (hereafter Treasury), Combating Human Trafficking, January 29, 2020; Organization for Security and Co-operation in Europe (OSCE), Follow the Money: How Financial Investigations Aid in the Fight Against Trafficking in Human Beings, March 3, 2020; Representatives Bryan Steil and Madeleine Dean, “To Fight Human Trafficking, Follow the Money,” The Hill, opinion, July 15, 2019; Polaris, On-Ramps, Intersections, and Exit Routes: A Roadmap for Systems and Industries to Prevent and Disrupt Human Trafficking— Financial Services Industry, July 2018; Fabio Teixeira, “Follow the Money to Fight Human Trafficking, Top Interpol Director Says,” Reuters, September 12, 2019; Jamille Bigio, “Human Trafficking Helps Terrorists Earn Money and Strategic Advantage,” Foreign Policy, opinion, January 31, 2020. 4 International Labour Organization, Profits and Poverty: The Economics of Forced Labour, 2014, p. 13. Treasury refers to this estimate on the webpage “Combating Human Trafficking,” dated January 29, 2020, and at https://home.treasury.gov/news/featured-stories/combating-human-trafficking. 5 See President’s Interagency Task Force (PITF), Report on U.S. Government Efforts to Combat Trafficking in Persons, October 2020. Congressional Research Service 1 Sanctions Programs Targeting Human Traffickers: In Brief Prevention and Protection Reauthorization Act of 2018 (P.L. 115-425) amended Section 105 of the TVPA to include the Secretary of the Treasury as a required member of the PITF. TFI Mandate. Section 222(a) of the Transportation, Treasury, Independent Agencies, and General Government Appropriations Act, 2005 (Division H, Title II of P.L. 108-447; 31 U.S.C. 312), established within the Department of the Treasury an Office of Terrorism and Financial Intelligence (TFI). In 2019, Section 7153 of the National Defense Authorization Act (NDAA) for FY2020 (P.L. 116-92) expanded TFI’s mandate to require the provision of policy, strategic, and operational direction to the department on issues related to “combating illicit financing relating to human trafficking.” AML/CFT Supervisory Body Enhancements. Section 7154(c) of the FY2020 NDAA (P.L. 116-92) directed the Federal Financial Institutions Examination Council (FFIEC), in consultation with the Secretary of the Treasury, among others, to review and enhance training and bank examination procedures for anti-money laundering (AML) and countering the financing of terrorism (CFT) to also detect human trafficking-related financial transactions. FinCEN Advisories. The Financial Crimes Enforcement Network (FinCEN), a Treasury bureau, administers what is commonly known as the Bank Secrecy Act and related AML provisions, including the collection of suspicious activity reports.6 To support the financial services community in achieving its AML/CFT compliance requirements, FinCEN has issued two advisories on financial red flags associated with human trafficking and related activity.7 FATF Reports. The Financial Action Task Force (FATF), of which the United States is a member, is an intergovernmental standards-setting body that provides guidance on AML/CFT best practices. Treasury’s Terrorist Financing and Financial Crimes (TFFC) assistant secretary, who reports to the TFI Undersecretary, leads the U.S. delegation to FATF. With U.S. support, FATF has issued two reports on human trafficking and illicit financial flows.8 Egmont Group Project. The Egmont Group is an intergovernmental platform for technical information exchange on AML/CFT, composed of 166 Financial Intelligence Units (FIUs) worldwide.9 As the U.S. FIU, FinCEN supports the work of the Egmont Group’s human trafficking awareness project, among other efforts. Human Trafficking Sanctions The President holds substantial decision-making power as to when economic sanctions are used in U.S. foreign policy.10 Citing authorities enacted by Congress, the President may establish sanctions programs to designate foreign persons (individuals and entities), block foreign assets under U.S. jurisdiction associated with such designated persons, and prohibit transactions involving designated persons and U.S. citizens or businesses, among other possible measures. Often, the President directs the establishment of sanctions programs through executive order (E.O.) and makes determinations based on national emergencies and treaty obligations stated in legislation. Treasury, through OFAC, issues federal regulations to administer such sanctions; other U.S. departments and agencies may also play a role in the implementation of sanctions programs. Section 111 of the TVPA (22 U.S.C. 7108) explicitly authorizes the President to invoke the International Emergency Economic Powers Act (IEEPA; Title II of P.L. 95-223; 50 U.S.C. 1701 et seq.)—without requiring the President to declare a national emergency, as provided for in the 6 31 U.S.C. 5311-5332; 12 U.S.C. 1829 and 1951-1959; 18 U.S.C. 1956-1957 and 1960. 7 Financial Crimes Enforcement Network (FinCEN), Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking—Financial Red Flags, Advisory, FIN-2014-A008, September 11, 2014; Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity, Advisory, FIN-2020- A008, October 15, 2020. 8 Financial Action Task Force (FATF), Money Laundering Risks Arising from Trafficking in Human Beings and Smuggling of Migrants, July 2011; Financial Flows from Human Trafficking, July