Everyone needs a bank. Including human traffickers.

Hidden in Plain Sight

Human trafficking is both a human rights violation and a criminal offense. Its primary characteristic is the exploitation of a victim, whether this be sexual, labour, or criminal exploitation. As a human rights violation, states (as public actors) have a responsibility to identify, protect, and support victims, whereas banks (as private actors) have due diligence obligations to limit the risk of potential violations within their own operations and those of their clients. As a crime, the state has the mandate to investigate human trafficking, whereas banks must not commit, facilitate, or profit from it.

Yet both in the Netherlands and worldwide, human trafficking remains under-reported, under-detected, and under-prosecuted. There are many reasons for this. Due to trauma, fear, guilt, or a lack of self-identification, victims are often reluctant to cooperate with authorities, even though this may mean sacrificing access to compensation and other protections. At the same time, criminal cases rely heavily on victims’ testimonies; without these, cases often stagnate. In the Netherlands, human trafficking is frequently described as an offense that authorities must actively ‘retrieve’ (a haaldelict), rather than one that is ’brought’ to them (a brengdelict). With capacity being limited and stretched between competing priorities, many potential cases remain in the shadows.

The Financial Side of Human Trafficking

Many of these challenges stem, in part, from the misconception that human trafficking always happens as an isolated, one-on-one offense between a single perpetrator and a single victim. In reality, human trafficking is a highly lucrative enterprise that often operates scale, generating substantial proceeds that must be laundered to become usable.

And nowadays, everyone needs a bank. Including human traffickers.

A number of recent global crises – from the War on Drugs to the Watergate scandal and the post-9/11 fight against terrorism – have led to a shift in banks’ societal role. No longer purely profit-driven entities, banks have become gatekeepers of the lawful financial system with a dual private-public identity. Anti-money laundering (AML) legislation requires banks to investigate customers and monitor their transactions.

Banks therefore hold a wealth of personal and transactional information, including where people shop, but potentially also who they exploit and how. If they detect an unusual transaction, this must be reported to the Financial Intelligence Unit (FIU), who can label them ‘suspicious’ and initiate a criminal investigation.

Navigating Points of Contention

This framework creates opportunities to detect not only money laundering but also its predicate offenses – i.e. those from which the laundered funds originate – like human trafficking. However, it also brings challenges.

Banks are the first link in a chain involving the FIU, law enforcement, and public prosecutors. In the AML framework described above, their relationship with these actors is often asymmetrical and one-directional, while the threat of sanction for non-compliance hangs over their heads. In their dual public-private role, banks must try to reconcile their public gatekeeping role with their private profit-making one. Both banks and the state have to navigate concerns about privacy, possible discrimination,  reputation, and legitimacy.

Still, experiences from voluntary collaborations like the Fintell Alliance show that banks want to do more than the bare minimum, acting also as driving forces in detecting financial economic crime. Public-private partnerships make it possible to make use of this legal framework and take detection from a box-ticking exercise to a more collaborative effort. In this way, banks and law enforcement can leverage their respective strengths. At the same time, parties can ensure they respect their mandates and openly address possible points of contention to avoid that they hinder collaboration altogether.

We argue that banks and law enforcement agencies have everything to gain from cooperating in the fight against human trafficking. We explore these opportunities and potential points of contention further in our article in Cahiers Politiestudies. This Anti-Trafficking Day, we, also on behalf of COMCRIM, invite policymakers, financial institutions, and researchers to continue efforts to transform financial data into a tool to make the still largely invisible crime of human trafficking visible.