Digital Currency Helps Human Traffickers Avoid Detection, Worrying Lawmakers

Human traffickers are using new financial tools to avoid detection and that worries lawmakers. The increasing use of cryptocurrencies and encrypted communications that make it harder for authorities to catch traffickers was discussed by witnesses at the House Financial Services Subcommittee on Oversight and Investigations, The Hill reports.

Representative Ann Wagner said that the ability to transfer money is the lifeblood of human trafficking.

“While money has historically been transmitted using remittance services and funnel accounts, the use of prepaid cards and cryptocurrency create an unforeseen challenge for financial regulators,” she stated.

According to Texas Representative Al Green, the methodology by which compensation is being received is changing and people can now transfer money without the trail that the authorities are usually looking for. That’s why, he said, the strategy has to be changed.

According to the International Labor Organization, human trafficking generates about 150 billion dollars per year. Commercial sexual exploitation accounts for 99 billion dollars of that sum.

Sophisticated algorithms that can detect online trafficking behavior is one of the new ways that the law enforcement and financial institutions are using to track traffickers. Dr.Louise Shelley, a professor at George Mason University told an example where sexual services were purchased under the guise of an online beauty salon transaction, but algorithms would recognize a manicure purchased at 2 a.m. for 100 dollars as a red flag for suspicious behavior.

“Implementing these new measures can move reporting rates on human trafficking cases from a 15 percent success rate [with standard reporting] … to an 85 percent success rate in case detection,” Shelley explained.

But tracing is more difficult when transactions are made with digital currency and the authorities have to search for trafficking activity both on the internet and the deep web where cryptocurrency transactions are increasingly prevalent. Trafficking sites on the deep web had seen their profits skyrocket thanks to the “drastic increase in the value of digital currencies such as bitcoin” in recent month, the New York County District Attorney Cyrus Vance Jr. explained.

Bassem Banafa, a financial forensics consultant, said that prepaid gift cards which can be purchased with cash and used online for illicit activities anonymously have also become a common form of payment. According to him, companies that process cryptocurrency payments could be important gatekeepers in targeting human traffickers. Banafa suggested a database that would include information from cryptocurrency processors to aid authorities in money laundering investigations.