This Week in AML
In January the US Department of Justice issued its National Strategy to Combat Human Trafficking. This week, a House of Representatives Committee held a hearing on Data Challenges Impacting Human Trafficking Research and Development of Anti-Trafficking Technological Tools. These two events highlight the increasing US national focus on human trafficking. John and Elliot discuss how the data issues noted at the hearing and the efforts identified in the DOJ Strategy impact the efforts of law enforcement and the financial crime compliance community to identify, disrupt, and stop human trafficking.
National Focus on Human Trafficking TRANSCRIPT
John Byrne: Hi, Elliot, how's it going?
Elliot Berman: Going okay. So a lot in the human trafficking area this week. Last month, of course, the DOJ issued a study. Actually not a study, but their national strategy to combat human trafficking. On Tuesday of this week, one of the house of representatives committees held a hearing that was focused on the inadequacy of the data available to help combat human trafficking. I know you follow this area, so I'm assuming you saw both of them.
John Byrne: Right. It's obviously human trafficking awareness month. We also know that historically, unfortunately, where the Superbowl is held, there's a lot of concern about trafficking happening there. So a lot of our financial institutions have sort of ramped up if they're in the city where the Superbowl is being held to be more aware, be more proactive there. Also one of our colleagues, presenter, at our webinars, and somebody I've been able to sit down and do a podcast with, Dr. Louise Shelley who is at the Schar School of Policy and Government here at George Mason.
She's the director of the Terrorism, Transnational Crime and Corruption Center, somebody that I've been able to work with in a class that I teach that she got me involved in. She also testified at that hearing on data challenges. So what's interesting here is while we've been doing a lot in this space, this hearing tells us sort of what we knew intuitively that we don't really know the scope of the problem.
We know it's a major problem. It's a global problem, but data gaps made it tough to figure out where to spend time and resources. In addition to Dr. Shelley testifying, the GAO released a study that day. And, you know, GAO always has in the title is pretty direct on what it's about, human and drug trafficking actions are needed to address gaps in federal data.
That report does talk about, you know, the need for agencies to be better equipped. You know to deal with how to protect against and how to report and detect human trafficking. One of the things that jumped out at me at least was something that we knew intuitively again, but something also that everybody's also focused on virtual currency. That how much virtual currency and drug trafficking have increased, you know, since the pandemic, but also help enable human trafficking. So we know the GAO, as they always do, brought that to the forefront with their testimony at the hearing earlier this week.
Elliot Berman: Yeah, I thought that there was a line in Dr. Shelly's testimony that caught my eye. I'm going to quote it here. It's right in the introduction. It says, "we are at a pre-scientific level in understanding the dynamics and diverse elements of labor, sex, and other forms of trafficking." You know, you and I, but lots of, pretty much everybody talks about how much data, you know, we're sort of drowning in data. Yet the focus of that hearing was very much on the fact that we don't have comprehensive data theft.
Even though lots of people have and lots of governmental agencies have looked at elements of trafficking.
There hasn't really been an effort to create a comprehensive data lake so that all of the people who are trying to tap into data to meet their particular mission or to really interfere with and disrupt trafficking have a common source of high-quality data. It's a little bit of this and a little bit of that which seems to be a huge impediment to really getting an effective strategy that can disrupt trafficking on a global basis.
John Byrne: Right. And going back to the GAO study. They spent a lot of time talking about virtual currency, both from a drug trafficking and a human trafficking aspect.
So there's a lot there where they identify the agencies that are focusing on virtual currency. We both know that the justice department is creating the FBI is creating a section in the financial crimes area on virtual currency. Obviously, IRS-CI and others have done some things in there as well.
They do quote FinCEN data on SARS suspicious activity reports and talk about the pretty dramatic increase. SARS that referenced both human trafficking and virtual currency, you know, that's obviously an important data point, but still, SARS don't indicate direct illegal activity. They certainly indicate that the institutions believe there were some unusual activity. But going back to Dr. Shelley's testimony, and again, she's been very generous with her time talking to us and providing information.
One of the other things that I wanted to highlight in her testimony, which she participated in a webinar that we were able to put together on some of her analysis, sort of an anecdote there that I think points to the value proposition doing content for our community. She mentions that after the webinar, one of the bankers that listened in, so one of our clients or community members told her that the analysis that she was doing was her Polaris and a survivor victim of trafficking that the analysis helped him refine his data analytics in regards to specifically identifying hotels that facilitate human trafficking. So a really good example of the more data you have, the more proactive you can be and the more potentially successful you can be. So I think that's the importance of this and obviously the information presented at Tuesday's hearing.
Elliot Berman: Agreed. So this is something that will continue to unfold. I'm sure that there will be periodic reports coming out of the DOJ based on their activity. Ideally, the hearing that was held this week will not just be a collection of interesting testimony, but it will lead to additional discussions and, ideally, action. Whether that's legislation or funding of existing initiatives or whatever it might be.
So, this is a topic that, as you've mentioned, we've certainly picked. We, you know, AML RightSource, but you and I as well have paid a lot of attention to, and want to keep talking about and keeping in the front of everybody's minds so that we're all doing whatever we can individually to make a difference.
John Byrne: That's right. I would just say Elliot this month, and we've talked about this earlier. We have a live webinar on February 24th at one o'clock Eastern. What's New for 2022 and we'll have three members of our advisory board that will give you their insight from a FinTech advisory and large bank perspective on what the issues are.
There's a number of them that we'll be covering. There's a priority—regulation expected in April and some other things. So we'll be covering some of those issues on February 24th. Go to our website [and] you can register for the webinar.
There's a wide variety of podcasts and materials that you can access on those platforms as well as on our website. So we hope that we're helping all of you with doing your jobs better and staying well-informed. John, you have a great weekend, and we'll talk next week.
John Byrne: Take care, Elliot.
Elliot Berman: You too. Bye-bye.