This analysis, based on Bank Secrecy Act (BSA) reporting from January 2020 to December 2021, reveals concerning trends that underscore the need for heightened vigilance and cooperation across financial institutions and law enforcement agencies.
FinCEN Director Andrea Gacki emphasized the gravity of the situation, highlighting how human traffickers exploit vulnerable individuals, including adults and children, for financial gain. Gacki emphasized the crucial role of financial institutions in providing timely reporting to law enforcement agencies, enabling them to investigate potential cases of human trafficking and related crimes effectively.
The FTA aligns with Treasury’s broader efforts to combat human trafficking and the illicit use of CVC. Notably, FinCEN has joined forces with the Canadian financial intelligence unit’s Project Protect, a pivotal public-private partnership aimed at combating human trafficking. Additionally, FinCEN’s identification of human trafficking and cybercrime as national priorities underscores the agency’s commitment to addressing these critical issues.
Building on previous actions, FinCEN’s analysis reinforces the agency’s stance on CVC-related crimes. In October 2023, FinCEN designated CVC mixing as a primary money laundering concern under Section 311 of the USA PATRIOT Act. This designation was accompanied by proposed reporting requirements aimed at increasing transparency in CVC-related transactions.
The FTA highlights several key findings derived from BSA reporting by regulated financial institutions:
- Surge in Reports: The total number of OCSE- and human trafficking-related BSA reports involving CVC saw a substantial increase from 336 in 2020 to 1,975 in 2021, indicating a concerning trend in illicit activities.
- Identification of CSAM: BSA filers predominantly reported instances of child sexual abuse material (CSAM) or human trafficking alongside CVC transactions, underscoring the urgent need for intervention and investigation.
- Bitcoin Dominance: While Bitcoin emerged as the primary CVC used in purported OCSE- and human trafficking-related activities, the analysis acknowledges the potential involvement of other CVCs in such crimes.
- Typologies of Abuse: FinCEN identified four common typologies within BSA reports related to OCSE and human trafficking, including the use of darknet marketplaces, peer-to-peer exchanges, CVC mixers, and CVC kiosks.
FinCEN’s Financial Trend Analysis serves as a critical tool in understanding and addressing the complex nexus between CVC, online child sexual exploitation, and human trafficking. By leveraging BSA reporting and collaborative initiatives, FinCEN aims to empower financial institutions and law enforcement agencies in their fight against these heinous crimes. Moving forward, continued vigilance, cooperation, and regulatory measures will be essential to safeguarding vulnerable individuals and preserving the integrity of the financial system.