FIAU warns practitioners to heed signs of human traffickers and victims

FIAU’s guidance note on human trafficking lists red flags for banks, notaries, realtors and other subject-persons on how to spot suspicious transactions related to sex exploitation and human trafficking

Malta’s financial intelligence authority has issued guidance to banks and financial practitioner and other subject-persons subject to money laundering rules, on how to identify red flags on the island’s human trafficking victims.

The FIAU said attention had to be paid to customers’ contact information when this is connected to advertising related to escort services, model agencies, entertainment agencies or sexual services found on the internet, or even if connected to a known nightclub district – a veiled reference to Paceville, home to so many so-called ‘gentleman’s clubs’.

It also called on practitioners to be suspicious when multiple customers opening multiple accounts are using a common mobile number, address and employment reference; or when clients avoid face-to-face contact, show signs of fear, distress, or depression, or if they are unable to recall certain details, such a home address, by heart.

The FIAU lists several case studies in which suspected transactions could be flagged on account of possible human trafficking taking place.

A case in point a large amount of ticket purchases from different airlines which might appear incommensurate with the type of business and the business undertaking, such as that of a foreign national resident in Malta and registered as a sole shareholder and director of a construction company. The discrepancy between the purchasing of the airline tickets and the type of business and the business undertaking, would represent a red flag for financial services practitioners.

Statistics from the Council of Europe’s GRETA (Group of Experts on Action Against Trafficking in Human Beings) evaluation report on Malta show that the total number of formally identified victims of trafficking in human beings in 2017-2020 stood at 44, with labour exploitation representing 77% of identified cases.

All adult victims were of foreign origin, with Ukraine and the Philippines representing the primary countries of origin (19 and 16 victims respectively) with additional victims originating from China (three) and Hungary (two).

Migrant workers from Asia (and especially the Philippines) are at risk of trafficking and exploitation in the construction, cleaning, domestic work and fishing sectors, particularly when these services are outsourced. Women working in “gentlemen’s clubs” and massage parlours experience heightened risk of sexual exploitation.

In Malta, reports of both domestic and foreign victims having been exploited by human traffickers have been noted by the US Department of State’s annual report. “Sex traffickers exploit foreign national and Maltese women and children, and labour traffickers exploit foreign men and women. […] Fraudulent labour recruitment continues to occur; traffickers replace the originally signed contract with a less favourable one upon arrival in Malta or force victims to perform a completely different job than what was agreed upon.”

It is common for traffickers to confiscate the passports of victims upon their arrival. When exploiting these victims, it is likely that there will be coordinated actions between traffickers, co-nationals of the victims, as well as Maltese citizens.

The patterns of human trafficking in Malta are myriad. Profit can be garnered from labour and sex trafficking through abusive employment schemes, such as visa fraud and wage retention by misleading or defrauding victims.

In such cases, recruiters might distort the conditions and nature of employment, confiscate, or destroy the employee’s identity documents and violate employment contracts.

Even foreign nationals with legitimate temporary work or student visas can be the victims of exploitation. Debt bondage can also take place by charging the workers abusive fees, which take years to repay, and withholding their salary or paying a salary which is less than promised. The trafficker may claim that the fees cover the recruitment costs or the access to job opportunities.

The FIAU says subject-persons should pay attention to situations where there may be multiple employees receiving the allocated salary in the same single account, and to funds which are instantly withdrawn upon receipt or transferred once more to another account. These so-called ‘funnel accounts’ allow criminals or victims to deposit illicit funds at one location, which funds are then rapidly withdrawn by colluding parties from various other locations.

This method provides criminals with instant access to money. The funds deposited are usually low value sums to avoid attracting attention and help in maintaining a degree of obscurity for human traffickers since transactions cannot be easily picked out and identified.

Traffickers usually accept payment via prepaid cards, credit cards, mobile payment applications and convertible virtual currency, but third-party payment processors (TPPPs) allows them to mask the true origin of the payment by using temporary email addresses and funding the account with a virtual credit card, even using VPNs to hide their IP addresses for online transactions.