Finance Monthly - April 2023

Another area that often throws up red flags is what is known as “loading.” Are there multiple hotel rooms booked by the same individual? Are there numerous non-related individuals residing at the same address? Last, there may be a public appearance profile that may look unusual. Are there frequent purchases at cosmetic stores or beauty salons? Are there transactions to escort agencies or classified sex industry advertising services? Are there relatively high expenditures unrelated to the stated business purpose? Following the money provides a pathway to identifying human traffickers. Payment activity is an important way to discover a human trafficking situation. Are there repeated cash withdrawals and deposits across multiple cities at multiple ATMs or branches? Are cross-border transfers inconsistent with the stated business purpose or from areas with an elevated risk of trafficking? Last, are there frequent cash transactions in amounts just under reporting requirements? Is there a circulation of funds between seemingly unrelated accounts? All of these may indicate an underlying issue of human trafficking. Red flags around personal behaviour may also signal incidents of human trafficking activity going beyond simple and direct transactional activity. Mannerisms play a significant role in detection. For example, does the person seems submissive or tense? When questions are directed to another individual, do they rely on another person to provide information? If a minor, are they unaccompanied at odd hours or locations where they seem out of place and do they falter when explaining their behaviour? A person’s residence may also provide clues tohuman tracking. For example, does the residence have a substantial amount of garbage compared to the number of people living at the location? Another sign is seeing unusual traffic around a particular residence without a clear explanation. Or there may be an extraordinary amount of people entering and leaving the residence. Additional signs include residents working long or excessive hours or appearing to be available “ondemand.” Law enforcement also notes if an individual has multiple phone lines or numerous social media accounts. Using Red Flags to Enhance Detection As you can see, detection can be overly complicated. There can be legitimate explanations for any of the above red flags. Being tense or lacking identification could signify many things and have legitimate reasons. Booking multiple rooms under the same name does not necessarily indicate criminal activity. So how can financial organisations use these red flags to detect human trafficking if legitimate explanations could nullify any of them? To understand who your customers are and the intended use of their accounts, financial institutions must implement a robust Know Your Customer (KYC) program. A strong Client Due Diligence (CDD) program can also identify and track red flags. Individually, they may not pose any risk; however, a combination of them may start to indicate a problem by leveraging innovative technologies with robust monitoring and detection models that can identify combinations of red flags that can lead to trigger alerts that indicate unusual activity. Financial institutions must also train the staff reviewing these alerts to understand the red flags and perform thorough investigations to ensure nothing suspicious is “Red flags around personal behaviour may also signal incidents of human trafficking activity.” Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s 21

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