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Punishment
To Stop Human Trafficking, Stop Money Laundering
Traffickers can't spend their millions without "cleaning" their dirty money.
Posted August 17, 2021 Reviewed by Lybi Ma
Key points
- Money-laundering enables the human-trafficking industry.
- A trafficker may make millions of dollars a year, but he can't spend it until he's "cleaned it" and made it appear legitimate.
- Law enforcement needs funding to attack money laundering. Defunding police undermines a most effective way of stopping trafficking.
Money laundering is among the biggest factors that enable human trafficking. As Kevin Sullivan from the Anti-Money Laundering Training Academy says, “Without money laundering, the human trafficking industry would be impossible.”
Here’s why. In the case of a human trafficker in New York, he (it could be “she,” but odds are, it’s a “he”) may have four girls he’s sending out each night. Each of these girls has a nightly quota of $2000. In the course of a month, his income from these girls may be more than $200,000.
The trafficker’s problem is, if he wants to spend $200,000 to buy a new Lamborghini, he can’t just stroll into a showroom and pay cash. People would immediately suspect he’s using dirty money. He’d quickly come to the attention of law enforcement.
And he certainly can’t deposit that kind of money in a bank. Bank officials are trained to ask where the money came from. If the trafficker can’t point to a legitimate source for the income, the bank official will file a Suspicious Activity Report (SAR) and someone in law enforcement will probably be taking a look at it.
Anti-money laundering efforts are an effective way of throwing sand in the gears of an otherwise smoothly functioning human trafficking operation. After all, what good does it do the trafficker if he can’t spend the money? Particularly, if spending it lands him in jail.
A Case Example
Sullivan, during his former career as an investigator for the New York State Police, has seen almost countless money-laundering cases, but here’s a typical one.
He recalls that several years ago he became aware of a woman who was depositing $30,000 a month into her personal bank account. When the woman first opened her account, a bank official had asked her a routine question: “Where is this money coming from?”
The woman had what might seem like a good answer. “It’s my new job as a chauffeur,” she answered. “My clients are from overseas and they pay me in cash.”
She, in fact, did receive monthly paychecks from a limousine company. However, although the initial deposit was relatively small, with each successive month, the amounts on the checks kept growing.
Eventually, the alleged chauffeur was depositing more than $30,000 a month. The bank employee felt that something might be fishy. She alerted others at the bank.
Bank officials conducted a vertical and horizontal analysis. In the vertical part of the review, they looked at all the alleged chauffeur’s transactions over a period of time. In the horizontal review, they looked at other customers in her industry.
The bank officials noticed that no other chauffeurs were making this kind of money; her story didn’t add up.
As a member of the NY State Police, Sullivan was alerted.
Uncovering a Money Laundering Case
“I looked at her criminal history, and her credit reports,” Sullivan remembers, “but there wasn’t anything that was a red flag.”
He dug deeper and found something interesting. “I discovered she didn’t have a chauffeur’s license.”
Sullivan calculated that it was possible that the company she worked for had simply never asked her if she was licensed. He checked the name of the company she worked for to see if they had a taxi or limousine license.
They didn’t.
He decided to pay a visit to the East End address where the company was located. The doorman informed him that the occupants had moved out a couple of months ago.
Then, when Sullivan searched what he could learn from the Internet, he got a 404 Not Found error. The limousine company’s website had been scrubbed.
However, using the digital archive Wayback Machine, he was able to recover the missing website. Interestingly, the website he found had no links to hotels or restaurants, as you’d expect with a real limousine company.
No, the links were to escort sites.
“When I subpoenaed the records,” Sullivan said, “I found where the money was really coming from. Foreign visitors would come to the company and avail themselves of a menu of hundreds of girls who were each prepared to perform various services.”
But “full service” in this case is penetrative sex. In addition, clients could choose golden showers, spanking, whipping, being handcuffed, or any of dozens of other practice—practices with no relationship to chauffeur services.
Sullivan was able to track the money to a Genovese family member, and he ended up being sentenced to five years in jail.
Prosecuting Money Laundering Crimes
Sullivan sees immense societal value in prosecuting money laundering crimes. It’s often hard to get witnesses to testify, but with a paper trail, like the kind he was able to put together in the case of the fake chauffeur, perpetrators can be brought to justice.
Unfortunately, according to a study that appeared in PlosOne, the public does not fully understand what modern slavery even entails. From survey data of 682 participants from the Midlands of England, there is a general misunderstanding of psychological coercion, and human trafficking is even often confused with immigration1.
Sullivan worries about efforts to defund the police. “When police departments are forced to decrease their budgets, the first areas they cut are training and efforts to go after financial crimes.”
For those who want to combat human trafficking, this is beyond unfortunate. As he summarizes, “It’s anti-Money laundering efforts that have the biggest impact on stopping human trafficking.”
