EXPERT TALK SEX TRAFFICKING AND MONEY LAUNDERING The dual dilemma facing both law enforcement and the financial sector by Elvis Asiamah & Anastasia Kouloganes Sex trafficking in the United States has long avoided national focus and significant media attention, despite being a lucrative business for criminal organizations. As a result, the true extent of this criminal activity has remained obscured, but the October 2016 dismantling of a U.S.-Thailand international sextrafficking ring shines the spotlight on the pervasive nature of the problem, as well as links to other illicit activities, including money laundering. THE U.S.-THAILAND RING A total of 17 traffickers were arrested across the United States in connection with what has been referred to as a sophisticated sextrafficking operation involving hundreds of women trafficked from Thailand to America over the past seven years. Moreover, the illicit profits from the commercial sex operations were laundered and then used to continue funding the activities. 1 As is often the case with human trafficking victims the world over, these Thai women were promised a better life in the United States and subsequently smuggled into the country under fraudulent visas. Upon arrival, they were forced to work as prostitutes to pay off enormous sums in bondage debts supposedly incurred during their transportation to North America. 2 And this is not an isolated case: The staggering number of sex-trafficking cases in the United States (more than 4,000 were reported in 2016 alone) is a major cause for concern. 3 Despite efforts by law enforcement agencies to find and prosecute sex traffickers, criminal organizations are constantly expanding their areas of operation and implementing new techniques, tactics and procedures to exploit weaknesses in the current detection architecture. The map below shows the cities in which the members of the U.S.- Thailand trafficking ring operated houses of prostitution or engaged in other activities. Runners were used to transport victims to different locations, using both ground and air transportation. 4 The lines on the map below show the known routes used by runners to transport victims, but it is not a comprehensive depiction of routes since not all have been released to the public. MN THAILAND Victims flew to Los Angeles with B1/B2 tourist visas approved for fictitious travel plans listed on the application. Los Angeles CA Las Vegas AZ TX Dallas Chicago IL IN GA Minneapolis served as the trafficking ring s headquarters, with at least seven prostitution locations throughout the city. Victims were transported to other cities in the United States based on requests from other house bosses. The group s leader is also alleged to have operated a house here. Houston 1 2 http://www.cbsnews.com/news/thailand-u-s-sex-trafficking-ring-busted-17-arrested/ 3 https://humantraffickinghotline.org/states 4 ; http://kstp.com/national/us-thailand-sex-trafficking-operation-arrests/4282581/ FL The views and opinions expressed in this paper are those of the authors and do not necessarily reflect the official policy or position of Thomson Reuters.
COMPLEX INTERNATIONAL NETWORKS Human trafficking is the second-largest crime worldwide, and approximately 80% of trafficking victims are sexually exploited. 5 While many victims in the United States are U.S. citizens, victims are also trafficked from Mexico and other countries across the globe, including China. 6 This is supported by the U.S. Department of State s Trafficking in Persons Report, which notes that victims originating in Thailand are often brought to the United States for prostitution. 7 Nevertheless, the discovery of such a far-reaching network of perpetrators as in the U.S.-Thailand case is an unusual discovery for law enforcement. 8 The collapse of the ring saw 12 Thai citizens and five U.S. citizens arrested across Minnesota, California, Illinois, Georgia and Hawaii, as well as the arrest of the alleged leader, Sumalee Intarathong of Liege, Belgium. 9 In addition, between 2006 and 2009, Intarathong seems to have had at least three travel companies registered in the United Kingdom under either her Thai name or an alias, Emily Alice Spencer Warren. 10 While no public information suggests that these companies were used for illicit activities, at the very least her time in the tourism industry provided her with experience regarding tourist visa applications the very same visa type used to traffic the Thai women into the United States. 11 This information raises several questions: What are the logistics of such an operation, and how could it go unnoticed for seven years? How do these networks move money to finance their operations? How many other similar operations remain active? The answers to these questions are key to improving our capacity to counter sex-trafficking networks. PERVASIVE UNDERREPORTING Sex-trafficking cases in the United States have historically been underreported, and the true number of victims and incidents remains unknown. Victims do not always seek help owing to a general distrust of those around them, or in the case of the U.S.-Thailand ring, because of threats to the safety of their families in Thailand. 12 The media also rarely report on sex-trafficking cases and, as a result, the gravity of the issue is lost to many within the United States. In October of last year alone, many sex-trafficking cases did not reach major media headlines. For example, in one case, a South Carolina man pleaded guilty to a sex-trafficking scheme involving underaged girls. 13 Farther south, six people with ties to the Polywood Crips street gang in Fort Worth, Texas, were also indicted in a sex-trafficking conspiracy in which the perpetrators operated for more than three years. 14 A larger international operation called Cross Country X 15 led by the FBI focused on underaged human trafficking and resulted in the arrest of 239 traffickers and the rescue of 82 minors. One perpetrator was a Milwaukee mother who served as the pimp of her two underage daughters. 16 These are just a few incidents that came to light in October 2016, but they remain absent from major headlines. THE LOGISTICS OF A SEX-TRAFFICKING OPERATION The perpetrators in the U.S.-Thai case followed a pattern commonly implemented by human traffickers around the world: 17 Traffickers in Thailand recruited many women who were unable to speak English, promising employment and a comfortable life in the United States. They then assisted the women in applying for tourist visas by collecting information about them, filling out their applications and creating false bank accounts in their names. 18 Upon arrival at Los Angeles International Airport, the victims quickly realized the true situation. At this point, the traffickers, as is often the case, turned hostile and told their victims they had to work to pay off $40,000 - $60,000 in bondage debts incurred as a result of their travel to the country. Victims were then transported to different locations, such as inns, spas or apartments used for commercial sex operations, and forced to work each day, eventually overstaying their fraudulent visas. 19 The underlying complexity of criminal organizations is evidenced by the vast network of individuals assigned to specific roles. In the case of the U.S.-Thailand incident, the trafficking ring comprised a leader, traffickers, house bosses, facilitators and runners (see diagram on the next page). To increase her profits, the leader played multiple roles, running a prostitution house in Minneapolis and traveling to Thailand to traffic women. The house bosses each ran a commercial sex location and communicated among themselves and with traffickers to decide where and when to transport each victim. Runners were used to transport victims between houses and were often paid through sexual acts. Facilitators played a variety of roles, including advertising the victims online and through other media, organizing the movement and travel of victims and laundering the illicit profits. 20 5 https://www.ice.gov/news/releases/using-financial-attack-strategy-combat-human-trafficking 6 https://humantraffickinghotline.org/sites/default/files/nhtrc%202015%20united%20states%20report%20-%20usa%20-%2001.01.15%20-%2012.31.15_otip_ Edited_06-09-16.pdf 7 https://www.state.gov/j/tip/rls/tiprpt/countries/2016/258876.htm 8,9 https://www.justice.gov/opa/pr/seventeen-individuals-indicted-respective-roles-human-trafficking-scheme-exploited-hundreds 10 https://www.companysearchesmadesimple.com/director/uk/911679175/?companynumber=05932498; http://www.cbetta.com/director/emily-alice-spencer-warren 11,12 13 http://www.coladaily.com/2016/10/25/columbia-man-pleads-guilty-sex-trafficking-scheme-involving-aged-girls/ 14 http://www.nbcdfw.com/news/local/6-with-ties-to-fort-worth-gang-indicted-in-child-sex-trafficking-conspiracy-398313401.html 15 https://www.fbi.gov/contact-us/field-offices/philadelphia/news/press-releases/fbi-announces-results-of-operation-cross-country-x 16 http://fox6now.com/2016/10/18/fbi-milwaukee-mother-accused-of-pimping-out-two-teenage-daughters/ 17 http://www.state.gov/documents/organization/258877.pdf 18,19,20
THE U.S.-THAILAND TRAFFICKING NETWORK Registered companies circa 2006 LONDON, UK LEADER Facilitator THAILAND House Boss MINNEAPOLIS, MN Arrested LIEGE, BE MONEY LAUNDERING FACILITATOR FACILITATOR FACILITATOR FACILITATOR VISAS ATLANTA, GA PHOENIX, AZ CHICAGO, IL FACILITATOR FACILITATOR RUNNER RUNNER RUNNER AIRPORT BANK HOTEL
SEX TRAFFICKING AND MONEY LAUNDERING Sex trafficking is often intertwined with other crimes, such as money laundering. Criminal networks recognize the enormous profit that lies in sex trafficking but are also acutely aware of the risks involved. Intent on concealing their operations, they often employ strategies such as money laundering to ensure that their operations continue undetected. While traffickers are known to use cash to avoid close scrutiny of their income, technological developments and the increased use of electronic banking have facilitated the process of illicit funds entering the formal banking system. Funds are split into smaller values to avoid detection when they are sent through electronic banking services. The indictment of the individuals in the U.S.-Thai trafficking network suggests that funds were deposited into bank accounts that were then used to facilitate the continued transport of victims to the United States and between the houses of operation. 21 While details of their laundering activities are sparse, the perpetrators could have been using funnel accounts to move their funds quickly. Funnel accounts rely on perpetrators friends or family to create accounts at major banking institutions. These individuals can then make deposits into the accounts usually below the $10,000 limit in order to avoid reporting requirements. Once the money is deposited, another individual in the criminal network can withdraw the money from anywhere in the United States. 22 U.S. EFFORTS TO DISRUPT TRAFFICKING OPERATIONS Despite the dearth of public attention, there are several established U.S. law enforcement agencies working hard to expose organizations and individuals engaged in sex trafficking. Many are currently working together through the Anti-Trafficking Coordination Team, and the FBI has created human trafficking task forces to organize stings and other anti-trafficking operations. 23 Project STAMP, run by the Department of Homeland Security s (DHS) Immigration and Customs Enforcement (ICE), partners with the financial sector to seize illicit profits and, in effect, shut down human trafficking operations. 24 These are just a few examples of the many government agencies that have implemented programs to fight human trafficking. Sadly, however, increased law enforcement operations and a degree of cooperation with the financial sector are simply not enough. With both national and international organizations like the UNODC and DHS ICE recognizing the nexus between human trafficking and money laundering, the importance of the private sector s role in combating these crimes cannot be overemphasized. 25 THE WAY FORWARD Detecting criminal networks to protect reputation, mitigate financial damage and prevent future incidents of trafficking and money laundering is a complex and onerous task. In our digital age, vast quantities of information are readily available, but organizations must invest in the right tools to deliver targeted intelligence if they are to successfully uncover hidden risks in business relationships and human networks. Thomson Reuters Risk Management Solutions for example, provides financial institutions, corporations, law enforcement personnel, government and intelligence agencies with a holistic solution that enables them to screen, monitor and analyze hidden risks, so they can really understand whom they are doing business with. This means that they can identify criminals before they have the chance to infiltrate the formal banking sector. A word of caution, however: While technological innovation offers an opportunity to fight criminal networks by delivering a plethora of resources, there is a downside in that technology also benefits criminals, offering new ways for them to exploit financial and law enforcement systems. Forward-thinking financial institutions, therefore, need to take heed of increasingly sophisticated criminal activity and invest in the right tools now to ensure that they remain a step ahead of the criminal underworld. 21 22 https://www.ice.gov/news/releases/using-financial-attack-strategy-combat-human-trafficking 23 https://www.fbi.gov/investigate/civil-rights/human-trafficking 24 https://www.ice.gov/stamp 25 https://www.ice.gov/news/releases/using-financial-attack-strategy-combat-human-trafficking; https://www.unodc.org/documents/data-and-analysis/studies/ Illicit_financial_flows_2011_web.pdf AUTHOR BIOS: Elvis Asiamah is a research analyst covering threat finance and global security for Thomson Reuters World-Check. He holds an MSc in Security Studies from University College London. Anastasia Kouloganes is a specialist research analyst covering human trafficking, threat finance and other global security issues for Thomson Reuters World-Check. She holds a BA in Government & Politics and Chinese from the University of Maryland. RISK MANAGEMENT SOLUTIONS FROM THOMSON REUTERS Risk Management Solutions bring together trusted regulatory, customer and pricing data, intuitive software and expert insight and services an unrivaled combination in the industry that empowers professionals and enterprises to confidently anticipate and act on risks and make smarter decisions that accelerate business performance. For more information, contact your representative or visit us online at risk.thomsonreuters.com 2017 Thomson Reuters S043051/1-17