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How a persona-based approach can help banks tackle human trafficking

Human trafficking is not only one of the biggest injustices of our time, but it is also one of the most widespread financial crimes in the world. Profits are estimated to be over $150 billion a year.  

Traffickers’ criminal techniques are becoming increasingly sophisticated, which makes it challenging for banks to spot and stop the transfer of illegal profits or ‘bad payments’. 

Everyone can and must do more, but the financial sector is uniquely placed to disrupt human trafficking. Financial data can reveal human crimes flowing through systems which are often hidden in plain view. 

Banks must look at fresh approaches to help them understand, identify and address human trafficking risk in their data and play a bigger role in combating human trafficking.

The scale of human trafficking 

Human trafficking comes in many different shapes and forms. Criminals across the world use various business models for different types of trafficking across different countries. 

A new person becomes a human trafficking victim every four seconds, and less than 1% of traffickers are prosecuted.  

Today, 50 million people live in modern slavery, an increase of 10 million from 2021, while online child sexual exploitation has become a global industry generating $20 billion per year.  Human trafficking remains one of the key challenges for financial institutions and the illicit gains from buying and selling people continue to flow through legitimate financial systems undetected.  

It is essential to first understand these crimes to be able to address them, and this global issue cannot be solved in silos. Traffickers have no borders, no budgets to consider and no data protection concerns. The onus is on increased public and private collaboration to fight them, but the financial sector can take the lead. 

Why financial institutions fail to detect human trafficking 

Despite $274bn being spent on the detection of financial crime per year, fewer than 1% of these crimes are investigated.  

Furthermore, 75% of employees within financial institutions are not confident in their ability to identify human trafficking signs in transactions.  

The current approach to tackling human trafficking is not working. Banks face numerous challenges when it comes to correctly spotting and preventing illicit payments. 

Firstly, they have trouble keeping up with the complexity of change both in regulations as well as the traffickers’ business models. Banks often don’t have the time nor resources to properly monitor and prevent human trafficking. 

These challenges are worsened by an ineffective incentive model that promotes a "box-ticking" compliance culture. This often results in blind spots in threat exposure and potential impact. 

Additionally, limited transaction monitoring rules fail to incorporate relevant typologies and red flags. In many cases, the core issues can be traced back to a lack of understanding regarding what to look for in extensive financial data to detect signs of human trafficking.

We must recognise that human trafficking behaviours often fall outside the typical anti-money laundering (AML) ruleset. Many transaction monitoring approaches still rely on rule-based alerts and scenarios built on thresholds or known generic money laundering factors. 

This approach cannot adequately detect the constantly evolving criminal behaviours and often results in potential high-quality alerts being overlooked amid the high rates of false positives. 

Embracing a persona-based approach

The financial sector can lead by example by moving away from outdated and rigid responses toward a more proactive and effective approach. 

Persona-based typologies are a method of categorising and understanding the different types of people, organisations and their characteristics in the context of specific financial crime types. 

This method involves using a combination of financial data analysis and investigative techniques to identify the financial activities of traffickers, their victims and associated networks. 

Rules-based technology cannot support a persona-based model as it generates separate alerts for the same customer with little to no context, significantly reducing operational efficiency and detection of real risks.

Personas allow banks to reveal the behavioural patterns that can be found across multiple individuals or organisations with similar traits. Within any human trafficking business model, multiple actors exist and interact, such as the trafficker, facilitator, recruiter, and victim.

In my view, banks should rely on personas rather than rules to help identify suspicious activity in financial data by looking for patterns in customer behaviour indicative of human crimes while reducing the likelihood of false positives. 

By working with the transaction monitoring team or vendors to move from simple rules and scenarios to a contextual persona-based approach, banks can help better identify actors and networks potentially involved in human trafficking, instead of flagging stand-alone transactions or behaviours.

Disrupting the business model of human trafficking

The regulatory pressure on banks and financial institutions is building. Human trafficking is one of FinCEN’s national anti-money laundering priorities while credit and financial institutions were fined almost USD 5bn in 2022 due to AML, KYC and sanctions breaches.

The persona-based approach to combating human trafficking presents a promising path forward. By understanding the complex web of criminals, victims, and associated networks, we can unmask the perpetrators of this crime and, in turn, enhance our efforts to protect vulnerable populations.

It's time for the financial sector, law enforcement, and the wider community to embrace this innovative methodology and join forces to disrupt the business model of human trafficking.

As the world grapples with rising armed conflicts and increasing risks to vulnerable populations, we must rise to the occasion.  

With the persona-based approach, we can better identify the patterns and behaviours of those involved, strengthen our prevention and detection measures, and make a significant impact in the fight against modern slavery. 

It's time to unmask human trafficking and stand together to eradicate this abhorrent crime.

 

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Comments: (1)

Raktim Singh
Raktim Singh - Infosys - Bangalore 09 December, 2023, 18:051 like 1 like

Really good points and wonderful article. I liked the point of 'banks should rely on personas rather than rules to help identify suspicious activity in financial data'. Though earlier this was cumbersome but now with technology, this can be done easily.

Silvija Krupena

Silvija Krupena

Head of Financial Crime

RedCompass Labs

Member since

20 Feb 2018

Location

London

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