Human Trafficking and Illicit Finance in the Era of Covid-19

By Christina Bain and Joseph Mari

As the COVID-19 pandemic continues to wreak havoc across the globe, criminals are finding new and manipulative ways to exploit the crisis. Human trafficking is evolving, creating a new wave of victims and revictimizing those already exploited. In addition, perpetrators are looking to diversify their illicit revenues by further coercing their trafficking victims. For the financial sector, this means a potential increase in attack vectors, and more resources are required to detect and identify the crimes brought about by evolving criminal enterprises.

Child Sexual Exploitation

Global school closures during the pandemic forced children to stay home, increasing their vulnerability to exploitation. UNESCO reports that during the height of the lockdowns in spring 2020 children in 194 countries were impacted by school closures, equaling 90 percent of students at all education levels. In August 2020, UNICEF issued a report stating that at least 463 million children were not even able to access remote learning during these lockdowns. This disruption in education and the routine well-being of children puts them at greater risk for exploitation. In addition, FinCEN released a supplemental advisory on human trafficking warning that “the effects of the pandemic may also impact the typologies and red flag indicators” since victims are not traveling and are not around any potential outside support.

Online enticement can also lead to instances of self-generated sexual images being circulated. Self-generated material is becoming a bigger issue alongside advancements in technology and the prevalence of websites that focus on image sharing. In addition, self-generated images may be produced under coercion and can create vulnerability to sextortion—when payment is extorted under the threat of the release of these sexual images and/or forced exchange of sexual images ultimately leading to human trafficking. Abusers are also accessing and luring children into conversations via platforms that are not secure and allow children to reach forums in the dark web.

Reports of online exploitation (images and videos) to the U.S. National Center for Missing and Exploited Children doubled in the first half of 2020 compared to the same period in 2019.

The Continued Rise of Cryptocurrency

Compounding the challenge of human trafficking and exploitation is the rise in popularity of cryptocurrencies such as bitcoin. Bitcoin, along with many other cryptocurrencies, rose in price exponentially throughout 2020 and so too has its adoption. This virtual gold rush has ushered in many new users and unfortunately also has created more financial crime risks across a number of predicate offences including trafficking and exploitation. In April 2020, the FBI said it expects more cryptocurrency-related schemes that target all demographics as a result of COVID-19.

Exploiting COVID-19 Relief Programs

Criminals, potentially including those involved in human trafficking, are also exploiting pandemic relief programs. As legitimate businesses have pivoted to offset the impact of COVID-19, illegitimate businesses have followed suit in adapting to the new conditions. According to CBS8, “Law enforcement officials and security consultants emphasize potential links between unemployment fraud and organized rings looking to bankroll serious crimes like human trafficking, drug dealing or gun smuggling.”

How the Financial Sector Is Addressing the Rise in Pandemic-Induced Criminality

In the face of the increase in online criminality, there have been several virtual forums held over the past year by international organizations, such as the United Nations Office on Drugs and Crime, the Organization for Security and Co-operation in Europe, and the Vatican’s Pontifical Academy of Science, to address these issues and work with civil society stakeholders like ACAMS and various NGOs.

Financial flows connected to online child exploitation were an emerging focus in 2020. Several organizations, such as Europol and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), published financial red flag indicators. In 2019, through the efforts of multiple U.S. government stakeholders and partners, the suspected operator of the biggest child sexual exploitation marketplace in the world was indicted and arrested. This effort resulted in the “rescue of over 20 child victims and the seizure of hundreds of thousands of dollars’ worth of Bitcoin,” according to the October 2020 report of the U.S. Attorney General’s Cyber-Digital Task Force.

It is now more important than ever that the financial sector draw on interdisciplinary collaboration, combined with other outside expert stakeholders, to understand the online risk environment. In order to stay ahead of illicit actors and the virus that has wreaked devastation on public health, economies, education, and overall well-being, the anti-human trafficking field must remain vigilant, flexible, and collective. 

Christina Bain is a Visiting Research Fellow at the Center for Strategic Studies. Joseph Mari is Director of the Financial Intelligence Unit and External Partnerships at Scotiabank.

Originally published in the March-May Vol. 20 No. 2 edition of ACAMS Today, a publication of ACAMS © 2021 – |

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