Following the Money: The Role of AML in Combatting Human Trafficking in Switzerland

Transcript

Hello. Um, welcome to the afternoon session. I have the pleasure of taking you through some of the speakers who are talking on very interesting legal and compliance and regulatory topics. Um, so first up with his keynote on combating uh, human trafficking is Bat Lemon from Emos which is the money laundering reporting office of Switzerland. Thank you very much for giving me the floor and thank you very much for giving me the opportunity to speak. My name is Pet Leman. I'm a lawyer and I work as a finance analyst at Emerald.

The role of AML in combating trafficking in human beings, THP. We did a project called Fiat Financial Intelligence against human trafficking. I will speak about that in a minute. First, please allow me to talk about trafficking in human being in general. The purpose of trafficking in human beings is always financial gain. Estimates say there is a profit of around$ 230 billion US annually, which makes it like the third profitable crime behind drug dealing and um dealing with

weapons. approximately 50 million people are um victims of human trafficking internationally and also in Switzerland in criminal code article 182 there are three forms named as um subcategories of human trafficking it's the sexual exploitation a lot often in prostitution uh this is the labor exploitation and And it is organ deal. Organ deal is so far we are not aware of cases in Switzerland. So I I cannot say it's not does not exist but we don't not we are not aware of it.

I think it's safe to say that THP is everywhere. Even though when I spoke to a prosecutor from a canton lately she told me that in her Canton THP does not exist. With all due respect I disagree. I'm pretty sure that THP is everywhere in Switzerland. Prosecutions are very very um need a lot of resources and usually the statements of a victim. That's why it's very hard to do prosecutions in THP cases.

We know that most of the money or a lot of money in THP is cash transactions. But even though with more than 200 billion a year some of the money go through financial system and there we hope to find it with project fiat. So what did we do? We organized around tables with mainly with authorities.

We had working groups with different stakeholders like law enforcement also financial intermediaries. The financial intermediaries tested to for some indicators to find the money and we made an operational alert with indicators as the centerpiece of in We focused on follow the money. As I said, a part of THP money goes through financial system. Therefore, it leaves some trace a trace and that's what we

are trying to find trying to find by sensitizing the financial industry to THP issues. We would like to learn about how it works. When is somebody exploited? It's not that easy. We are still strengthening the corporation, the financial industry with the financial intelligence unit which Emos is also one and also the corporation between authorities. So why did we fail? There is a large discrepancy between file SARS

STRS suspicious transaction transaction reports and the real scale of this crime. Naturally, the financial intermediaries play a very important role in combating THP because there are the financial transa transactions. They are sometimes in contact with the victims, sometimes with the perpetrators or at least they see the flows. As I said, there is a discrepancy. We had only a few reports with THP based on THP. Um, more sexual exploitation than labor exploitation.

Current phenomenas are nearly not present in the STRs. Companies are not present in the STRs. And usually often there is a lack of clarity and the reports do not have enough information for us. So one of the main things we did with fiat was to define indicators. We had um from other FIUs, for example, Canada an example, they did the same project or a similar project a few years

ago with pretty great success. So we could also take their indicators and adapted it to Swiss indicators. We have three different categories defined. This is the KYC indicators. KYC indicators. There it's helpful to think about what is a free person doing? How are transactions from a free person? How are they observed compared to a person who is not free?

For example, uh KYC indicator is I quote, "The customer's home address, email address or telephone number are linked to negative media coverage of human trafficking and related offenses. Media coverage of the client's activities connection with human trafficking and related offenses. There are also transactional indicators such as transactions between persons suspected by being involved in human trafficking or related offenses.

Incoming payments indicate that this person provides sexual services to an extremely high number of people on a daily basis. For example, no breaks, days off, or receives money for services provided by others. We have also behavioral indicators and there uh the financial intermediary can observe indications by meeting the customers due to onboarding online or online banking. This goes back this becomes less frequent with the exception of money transmitters. Maybe behavioral indicators could be I quote

the customer is always accompanied by someone to the bank payment service provider for near apparent reason for no apparent reasons. The accompanying persons insists on carrying the customers documents or money. Signs of exercising emotional control over a person. We have two subcategories. We have red indicators. When when there a red a red indicator exists that means to us we automatically automatically report to law enforcement.

The ones I did read before are red indicators. We have also yellow indicators which means they are less strong. They could also come from legal activity which is one of the big problems. In Switzerland for example, prostitution is not forbidden and somehow it's sometimes it's very hard to distinguish between legal and illicit activity. That being said, it's for the financial intermediaries.

It's pretty um it's a task to find out to implement their these indicators in automated reporting. A problem also is that THP, pardon me, that the amounts in THP are often very low and this does not trigger uh an an alert when uh doing compliance.

Let's make uh a case study. We had a report. This is a real report. There are several persons. There is a beauty salon. There are were a lot of cash deposits. Private account. Money came in. Money went out. Prompt cash payouts which is an indicator. Prompt cash payout abroad. Electronic transfers for adult entertainment commercials and rent payments and so on.

with database from our side or with information from the financial intermedi intermediaries and also uh with open source. We found out that indicators here in this case are as I said free frequent cash deposits transfers of relatively small amounts of money alignments of account in city X with corresponding cash withdrawals in city Y as well as foreign cash withdrawals in high-risk countries.

Repeated and frequent payments for adult entertainment advertisement. Connection to Redline Millio. Involved persons are listed in police databases due to DHB. Use of forged documents invoices and suspicious contradictionary behavior in the CP here in the beauty salon. The in-depth analysis of payment flows and account movements follow the money strategy can make a significant significant contribution to the detection of illegal activities and the

identification of victims in this area of crime. In addition, cooperation between financial sector, FIUs, law enforcements and NOS's is essential to effectively effectively combat human trafficking. Important is also the quality of the STRs, but this is a different topic I will not mention here. The role of AML in combating THP can be strengthened by sharpening to know what the partner what the other stakeholders need to get started. For example, by using information from NOS's by knowing

what the partners from private sector and authorities need to get started or in two words strengthening corporation. Together we can make a difference. Are there any questions or comments? after people outside

of this case. Um we work together with foreign fa foreign um financial intelligence units. we cannot press usually cannot prosecute somebody abroad. If it's a Swiss person is and and doing the crime abroad then we can this is this this is possible and um but if it's if he's outside you can also prosecute it here in Switzerland Switzerland but maybe Yeah. Yeah. and and as as um you say it's a very international crime trafficking human beings. So there is a lot of victims are are very much mobile and then one day they are in this

country another day in another country and yeah doing something. Yeah. Uh yeah I I'm not 100% sure but but I think yes we haven't done that so far that's not we we do not prosecute ourself our our office we just report to law enforcement or uh to the to theat yes and and human trafficking is in is in a canonel is always canonel yes except for some exceptions. Yeah. So, my time is up. So, thank you very much for

the attention. Thank you.