fatf REPORT Financial Flows from Human Trafficking July 2018 The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard. For more information about the FATF, please visit www.fatf-gafi.org This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The Asia/Pacific Group on Money Laundering is an inter-governmental organisation, consisting of 41 member jurisdictions, focused on ensuring that its members effectively implement the international standards against money laundering, terrorist financing and proliferation financing related to weapons of mass destruction. Citing reference: FATF - APG (2018), Financial Flows from Human Trafficking, FATF, Paris, France, www.fatf-gafi.org/publications/methodandtrends/documents/human-trafficking.html © 2018 FATF/OECD-APG. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the FATF Secretariat, 2 rue André Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: [email protected]) Photocredits coverphoto ©Thinkstock FINANCIAL FLOWS FROM HUMAN TRAFFICKING │ 1 Table of Contents ACRONYMS .......................................................................................................................................................... 2 EXECUTIVE SUMMARY .................................................................................................................................... 3 INTRODUCTION ................................................................................................................................................. 5 The previous report and this report ........................................................................................................................................... 5 Scope ......................................................................................................................................................................................................... 5 Objectives and structure ................................................................................................................................................................... 6 Methodology .......................................................................................................................................................................................... 7 PART ONE: OVERVIEW OF THE SCALE AND SCOPE OF HUMAN TRAFFICKING ........................... 9 Global estimates ................................................................................................................................................................................... 9 Profile of victims ............................................................................................................................................................................... 10 Geographical routes and trafficking flows ............................................................................................................................. 10 Domestic human trafficking flows ............................................................................................................................................ 10 Trafficking within regions ............................................................................................................................................................ 11 Trans-regional trafficking ............................................................................................................................................................. 11 Human trafficking, irregular migration and conflict ......................................................................................................... 12 Change in the scale and scope of human trafficking ......................................................................................................... 12 Proceeds derived from human trafficking ............................................................................................................................. 13 Terrorist financing from the proceeds of crime derived from human trafficking ............................................... 14 Links between human trafficking, migrant smuggling and kidnap for ransom .................................................... 16 AML/CFT risk assessments .......................................................................................................................................................... 16 PART TWO: ANALYSIS OF MONEY LAUNDERING FROM HUMAN TRAFFICKING CASE STUDIES ............................................................................................................................................................ 18 Human trafficking for sexual exploitation ............................................................................................................................. 20 Identifying suspicious transactions and money laundering from HTSE victim transactions......................... 20 Identifying money laundering and STRs from HTSE perpetrator or launderer transactions ........................ 24 Human trafficking for forced labour ........................................................................................................................................ 26 Types and characteristics of forced labour ........................................................................................................................... 27 Identifying suspicious transactions and money laundering from the types of HTFL ........................................ 28 Human trafficking for the removal of organs ....................................................................................................................... 32 Indicators of money laundering from human trafficking ............................................................................................... 34 PART THREE: CHALLENGES AND GOOD PRACTICES IN COMBATTING ML/TF FROM HUMAN TRAFFICKING ................................................................................................................................. 35 Challenges identified in the 2011 FATF Report .................................................................................................................. 35 Challenges identified in the current study ............................................................................................................................ 35 Good practices in combatting ML/TF from human trafficking .................................................................................... 38 CONCLUSION AND POTENTIAL NEXT STEPS ........................................................................................ 47 REFERENCES .................................................................................................................................................... 48 ANNEX A. ADDITIONAL CASE STUDIES .................................................................................................. 50 ANNEX B. INDICATORS OF LAUNDERING THE PROCEEDS OF HUMAN TRAFFICKING ........... 65 ANNEX C. NATIONAL ACTIONS TO CONSIDER TO ENSURE AN EFFECTIVE SYSTEM IN COMBATTING MONEY LAUNDERING/TERRORIST FINANCING FROM HUMAN TRAFFICKING .................................................................................................................................................. 71 © 2018 | FATF-APG Report 2 │ FINANCIAL FLOWS FROM HUMAN TRAFFICKING ACRONYMS AML/CFT Anti-Money Laundering/Countering the Financing of Terrorists FATF Financial Action Task Force FIU Financial Intelligence Unit FSRB FATF-style regional body HTFL Human Trafficking for the purpose of forced labour or services, slavery or practices similar to slavery, and servitude HTRO Human Trafficking for the purpose of removal of organs HTSE Human trafficking for the purpose the exploitation of the prostitution of others or other forms of sexual exploitation ILO International Labour Organisation ISIL Islamic State of Iraq and the Levant ML Money Laundering NPO Non-profit organisation NRA National Risk Assessment Reporting entities Private entities with obligations in a jurisdiction’s AML/CFT regime RTMG FATF’s Risks, Trends and Methods Group STR Suspicious Transaction Report TF Terrorist Financing The previous FATF report FATF’s 2011 report, Money Laundering Risks Arising from Trafficking in Human Beings and the Smuggling of Migrants UNODC United Nations Office on Drugs and Crime © 2018 | FATF-APG Report FINANCIAL FLOWS FROM HUMAN TRAFFICKING │ 3 Executive Summary 1. In addition to its enormous human cost, human trafficking is estimated to be one of the most profitable proceeds generating crime in the world, with the International Labour Organisation estimating that forced labour generates USD 150.2 billion per year. While in the past, many aspects of the crime went ‘unseen’, there is now an increased understanding of the breadth and gravity of human