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MVA White Collar Defense, Investigations, and Regulatory Advice Blog: Human Trafficking Awareness – What Financial Institutions Need to Know

January 2020

Charlotte Financial Regulatory Advice and Response Senior Counsel Sarah Byrne‘s blog titled “Human Trafficking Awareness  – What Financial Institutions Need to Know” was published January 13.

The blog article

Anti-Money Laundering and Know Your Customer departments at financial institutions are on the front lines of human trafficking.  Not only does enhanced transaction monitoring help law enforcement identify trafficking circumstances through generation of Suspicious Activity Reports but it helps avoid high risk lending relationships and cuts the power source of businesses or people who facilitate trafficking.

Recently, there has been an emergence of legal action related to organizational responsibility for human trafficking.  In November, the Australian Transaction Reports and Analysis Centre (Australia’s financial intelligence, anti-money laundering and counter-terrorism regulator) initiated a civil penalty order against Westpac Banking Corporation for failing to identify transactional patterns indicative of sex tourism or child sex trafficking in the Philippines.  The Federal Trafficking Victims Protection Act and various state human trafficking laws provide for a civil remedy for victims against those who financially benefit from a venture that they “should have known” involved human trafficking.

As intended by the Bank Secrecy Act, financial institutions are uniquely positioned to help combat criminal activities such as trafficking, thereby supporting its victims.  Without due attention to appropriate controls to identify and prevent misuse of financial institutions by human traffickers, organizations risk criminal, civil or enforcement actions as well as potential reputational damage.

To view the complete blog article, please click here.