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Almost half of UK bank specialists can’t spot signs of human trafficking among transactions

Only one in five expert staff believe they can stop transactions or behaviour linked to trafficking

Kate Hughes
Money Editor
Tuesday 06 October 2020 11:58 BST
Human trafficking and the drugs trade is facilitated by bank transactions
Human trafficking and the drugs trade is facilitated by bank transactions ( Chiara Caprio)

It is one of the most prolific crimes on Earth, affecting almost 25 million men, women and children.  

But human trafficking – the modern slave trade of living and breathing people for commercial gain – isn’t occurring on some distant, dusty and lawless shore.  

From domestic servitude, forced labour and forced marriage to sexual exploitation and the commercial trade in human organs, such harrowing practices steal through every nation on Earth, the UK included.  

The proceeds of these crimes are the subject of intense focus by law enforcement around the world, in a bid to tackle such activities.

In the UK, specialists in a third of banks and other consumer-facing financial institutions have admitted that human trafficking already accounts for significant financial losses. Half have had to investigate criminal activity linked to human trafficking among their own customer transactions.

These businesses are obliged by the regulator, the Financial Conduct Authority, to have systems and controls in place to counter the risk that they are misused for the purposes of financial crime of all types, including human trafficking, money laundering, terrorist financing and transfer of funds.  

As part of their legal obligations, financial organisations must identify customers using their services, take steps to monitor the transactions to detect those which are suspicious, and report their suspicions to the National Crime Agency (NCA).  

“Traditional detection of money laundering focuses on the rapid movement of funds through accounts, discrepancies between the stated intended use (or account type) and actual usage, along with other obvious red flags,” says Rob Horton, head of financial crime solutions at BAE Systems.

As criminals evolve their techniques to evade controls, so the financial services industry must also innovate. Many of the leading banks are now applying advanced analytics to look across multiple sources of data to indicate suspected human trafficking in the underlying financial data.

 That could include, for example, studying the transactional behaviour of large numbers of cash deposits as the victims’ identities are often used to facilitate money laundering.  

“When combined with profiling the financial transactions and online banking behaviour of these accounts, an accurate picture can be built to undercover criminal networks. There is also a human element,” Horton continues.  

“Nowadays branch staff are trained to spot potential ‘at risk’ customers, especially in the presence of further suspicion, for example visitors to the bank who are accompanied by a suspicious or controlling character.”

Anyone working in the regulated sector is required under the Proceeds of Crime and Terrorism Acts to submit suspicious activity reports (SARs) to the UK authorities if they know or even suspect that a person is engaged in or attempting money laundering.

Made by financial institutions and other professionals such as solicitors, accountants and estate agents, they provide intelligence from the private sector on a wide range of criminal activity, including economic crime that would otherwise not be visible to law enforcement.

SARs aren’t crime reports, they are designed to flag a possible concern in case law enforcement agencies shares those concerns.  

Each year, UK banks and building societies identify 20 million alerts of possible suspicious activity, investigate them, and then submit more than 400,000 SARs. Some involve a couple of hours’ work, others take days or weeks before the firm can decide if the reporting threshold of “suspicion” has been reached.

Some firms also work closely with charities like Stop the Traffik to help identify and tackle human trafficking.  

But a study of hundreds of professionals working in anti-money laundering, risk and fraud roles across financial, business, banking and insurance industries reveals shocking gaps in their capabilities.

More than 80 per cent are concerned that money laundering is currently happening in their customers’ transactions but two in five aren’t confident they can identify the signs of human trafficking among transactions, according to a new report by BAE Systems Applied Intelligence – the cybercrime and intelligence arm of the defence, security and aerospace multinational.  

More than one in 10 financial institutions still don’t have an anti-money laundering strategy in place, BAE Systems has warned, despite it being a legal requirement.  

Even if they do, just one in five in-house experts are confident they can stop the transactions or behaviour involved in human trafficking.  

“Tackling modern slavery is a priority for the NCA’s Joint Money Laundering Intelligence Taskforce where law enforcement, the financial sector and other agencies work to identify and tackle a wide range of serious crimes including human trafficking,” a spokesperson for UK Finance, the financial sector’s trade association, said in response to the findings.

“The sector spends over £5bn a year fighting economic crime, using a combination of advanced screening, monitoring technology and information sharing to target those who seek to transfer illicit funds through our financial system.  

“This includes preventing, identifying and disrupting attempts to abuse the legitimate financial system to launder the proceeds of modern slavery and human trafficking, with tackling of these crimes being an operational priority.

“At the same time, the industry works in close partnership with the government and law enforcement through the Economic Crime Plan, using our combined powers to make the UK one of the safest and most transparent places in the world to conduct financial business.”

But it is clear that they will have to do better to demonstrate a stronger moral position to consumers if they want to keep them.

“There has certainly been a marked shift in consumer attitudes towards banks and how they protect us over the last few years. Issues such as money laundering and trafficking are real-life human problems that are becoming more widely reported and understood,” says Horton.

“Three-quarters of [consumers] want their banks to be more transparent about this sort of criminal activity – in particular, demonstrating how it impacts customers as well as the wider society.”

Two-thirds of the UK’s consumers claim they would leave a bank or financial institution that fails to take a proactive approach. 

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