Canada’s financial watchdog has sent more than 100 disclosures to police in the past year on human trafficking in a quiet new initiative that targets traffickers by following their money.
Project Protect is a partnership between the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), financial institutions and law enforcement that is using money trails to detect and investigate traffickers. Banks’ anti-money laundering arms are starting to red flag suspicious accounts, based on indicators such as multiple motel bookings, large expenditures at drug stores and frequent ATM deposits in the middle of the night. They report suspicious activity to FinTRAC, which in turn notifies law enforcement.
In the year since the project was launched, FinTRAC has made 102 disclosures to police across Canada under the Project Protect label. By comparison, in the year before, there were 19 such trafficking-related disclosures.
Those who work to counter human trafficking say following the money trail can help back up a victim’s story and potentially reveal other people who are being exploited. It may also, eventually, help secure convictions, which are still rare for this crime.
“It’s a great tool for us,” said Detective Sergeant Nunzio Tramontozzi, head of the Toronto Police Service’s Sex Crimes-Human Trafficking Enforcement Team, which is part of the project. “We’ve had three or four investigations where the information that we received in the FinTRAC reports has helped us in our investigation.”
Its usefulness comes largely after the arrest is made, as “it really does corroborate everything that a victim says,” he said.
Human trafficking is defined as recruiting, transporting or controlling the movement of someone for the purpose of exploitation. More than 90 per cent of human-trafficking victims are female, and a quarter of victims are under the age of 18, according to Statistics Canada. Most police-reported cases in Canada are domestic, rather than cross-border, and most involve sexual exploitation.
It is a hidden crime, though not uncommon. Last year alone, Toronto police made 77 human-trafficking arrests, and laid 529 charges for trafficking or related offences. Police also found 67 victims last year – 60 per cent of whom were 16 and under. The youngest victim was 13 years old. So far this year, police have found another 12 victims, Det. Sgt. Tramontozzi said.
The new initiative was hatched in late 2015, when a crowd of bankers and consultants gathered in Toronto for an annual conference on financial crime and anti-money laundering. Appearing at the final day’s event was a survivor of human trafficking, Timea Nagy, and an RCMP constable who both spoke of the impact of the crime and the importance of looking at money flows. They appealed to the audience to help tackle the crime.
Peter Warrack, director of the Bank of Montreal’s anti-money laundering unit, stood up and publicly pledged his support.
“I just knew that financial institutions held an important key to identifying the traffickers, by seeing the money,” said Mr. Warrack, who has worked in the field for more than 20 years.
“What was going through my head was, as regulated financial institutions, we have a mandate to identify and report suspicious transactions, and human trafficking fell within that mandate.”
By the end of the day, he says FinTRAC – an independent federal agency created in 2000 with a mandate to detect and deter money laundering and the financing of terrorist activities – and all the other major banks were on board. Project Protect was officially launched in January, 2016, and has spurred information sharing on the warning signs and common financial indicators of trafficking.
In December, FinTRAC released an operational alert to 31,000 businesses, partners and police that included a lengthy list of indicators that point to signs of trafficking. Red flags include payments for online escort ads, frequent hotel and motel bookings along with air and rail purchases, frequent large purchases at pharmacies and lingerie shops, payment in bitcoin and frequent deposits or withdrawals between 10 p.m. and 6 a.m., along with banking activity at ATMs in different cities or provinces.
In the year before the project, financial institutions sent about 400 suspicious-transaction reports (STRs) to FinTRAC that involved human trafficking, human smuggling or related activity. In the year since, the number of human trafficking-related STRs rose to 2,000, FinTRAC said. They came from all of the Big Five banks along with money-service firms such as Western Union. Another 500 were sent in the first month of this year.
“I don’t think I really had an appreciation for how large it was going to get,” Michael Cowley, manager of FinTRAC’s central region intelligence unit, said in an interview at the agency’s Ottawa headquarters. “The quantity of reports has gone up, and the quality of the reporting has increased significantly, as well.”
It’s too early to evaluate how effective the project is in leading to arrests, additional charges or convictions, which are still rare. Since Canada introduced trafficking in persons legislation in 2005, there have been 53 completed adult court cases that had human trafficking as the most serious offence. Of those, as of 2014, less than a third resulted in a guilty finding, Statscan says.
And it may also raise concerns in some quarters over the balance between protecting clients’ privacy and efforts to curb crime. FinTRAC doesn’t automatically send all STRs to police; it evaluates and analyzes the reports and sends disclosures only if certain thresholds are met, said Barry MacKillop, FinTRAC’s deputy director of operations. (Under law, banks are already required to report to FinTRAC suspected cases of money laundering).
The financial disclosures “don’t typically, in my opinion, help us to identify a trafficking situation,” said Detective Cam Brooks of the Calgary Police Service’s Counter Exploitation Unit, in part because they don’t indicate whether a woman is working by her own free will in the trade, or whether she’s being exploited. But they have been useful in corroborating a victim’s story.
For example, an arrest last fall involved a man who coerced a woman into the sex trade, often abusing her. Over the next two years, she was allegedly moved across the country. The man would advertise her online, and then funnel money electronically into his own bank account, leaving the victim with almost nothing to support herself. She was cut off from friends and family, and denied routine medical treatment for diabetes, which several times led to her going to hospital.
The Project Protect disclosure was helpful in validating her story, he said. “We have to dig deeper than just what that information provides us. But it gives us a starting point.”
It’s not just banks getting on board. Accounting firms are, too. Grant Thornton LLP joined the project a year ago, and has produced two reports for clients in different sectors on the financial red flags for trafficking. “There’s been a strong response to stop this; we need to eradicate this and get this out of our communities,” said Jennifer Fiddian-Green, partner and anti-money laundering expert, who went to Winnipeg this month to train credit unions on what to watch for.
The project is a good addition for law enforcement, but it’s just one part of tackling the problem, said Barbara Gosse, CEO of the Canadian Centre to End Human Trafficking, who wants to see more focus on awareness and prevention.
“You need to have a multipronged approach,” she said. “Yes, Project Protect should be one of those prongs, no question, looking at the financial side of this, forensic accounting is positive. And yes, it can assist victims. But Project Protect takes place while the trafficking operation and exploitation is happening.
“We need to do more on the prevention side, we need to have other supports and right now.”
The Globe and Mail
Published Tuesday, Feb. 21, 2017 5:00AM EST
Last updated Tuesday, Feb. 21, 2017 7:14AM EST