FinCEN Alert Helps Financial Institutions Better Identify Potential Human Smuggling Transactions

In January 2023, the Financial Crimes Enforcement Network (FinCEN) issued an alert to aid financial institutions detect financial activity related to human smuggling along the U.S. southwest border.

Here are their recommendations.

Human Smuggling is An Escalating Problem

In the fiscal year 2022, over 2.3 million encounters of smuggling activity occurred at the U.S. southwest border — a sizable increase over the 500,000 incidents in 2020.

Oppressive and corrupt regimes in countries such as Venezuela, Cuba and Nicaragua have contributed to this uptick in smuggling activity which generates an estimated $2 – $6 billion in yearly revenue for illicit human smuggling operators.

Although most migrants encountered at the border originate from Mexico and other parts of Latin America, a growing number of encounters are with migrants from the Caribbean, Europe and Asia.

Seeking greater economic opportunity, family reunification, or fleeing from violence and conflict, too many of these exiles face exploitation or mistreatment by human smuggling organizations intent only on financial gain.

Upon arrival in the United States, some migrants’ status and circumstances make them vulnerable to human trafficking or other forms of exploitation. 

Money Laundering Methodologies

Human smuggling is a criminal activity perpetrated against individuals, and a financial crime affecting banks and other financial institutions.

Smuggling operations are often associated in some way with transnational criminal organizations (TCO), such as drug cartels, which either receive “protection tax” for safe passage through territory they “control” or are more involved in the day-to-day operations.

Human smuggling networks use various methodologies to launder their illicit payments, usually in the form of cash and wire transfers. These often overlap with money laundering methods used by TCOs:

Cash placement and layering into the formal financial system: These methods include cash purchases of high-value assets, including real estate and business, or to finance living expenses, purchase luxury items or to support the smuggler’s drug or gambling habits.

Funnel accounts: Smuggling networks may seek to establish accounts with financial institutions with a large U.S. presence to allow for easy collection of payments from the families of those being smuggled and who may be in the United States.

Alternative payment methods: In addition to cash, human traffickers now accept payment via mobile or peer-to-peer payment apps.

Financial Red Flag Indicators of Human Smuggling

FinCEN has identified the following financial red flag indicators to assist financial institutions in detecting, preventing, and reporting suspicious transactions associated with human smuggling. 

Because no single financial red flag indicator can conclusively determine illicit or suspicious activity, financial institutions should consider the relevant facts and circumstances of each transaction, in keeping with their risk-based approach to compliance.

  1. Transactions involving multiple wire transfers, cash deposits, or P2P payments from multiple originators from different geographic locations, either across (1) the United States or (2) Mexico and Central America, to one beneficiary located on or around the SW border, with no apparent business purpose.
  2. Deposits made by multiple individuals in multiple locations into a single account, not affiliated with the account holder’s area of residence or work, with no apparent business purpose.
  3. Currency deposits into U.S. accounts without explanation, followed by rapid wire transfers to countries with high migrant flows (e.g., Mexico, Central America) in a manner that is inconsistent with expected customer activity.
  4. Frequent exchange of small-denomination for larger-denomination bills by a customer who is not in a cash-intensive industry.
  5. Multiple customers sending wire transfers to the same beneficiary (who is not a relative and may be located in the sender’s home country), inconsistent with the customer’s usual business activity and reported occupation.
  6. A customer making significantly greater deposits—including cash deposits—than those of peers in similar professions or lines of business.
  7. A customer making cash deposits inconsistent with the customer’s line of business. 
  8. Extensive use of cash to purchase assets, such as real estate, and to conduct transactions.

Suspicious Activity Reporting

A financial institution must file a Suspicious Activity Report (SAR) with the FinCEN whenever there’s a suspected case of money laundering or fraud. 

SARs allow governments to spot and analyze emerging trends and patterns across a broad spectrum of personal and organized crime. 

Financial institutions must monitor customer transactions for potential money laundering or violations of the Bank Secrecy Act (BSA). If criminal activity is detected, the SAR must be filed within 30 days and kept for five years from the filing date.

Failure to comply with these regulations can result in civil and criminal penalties, including substantial fines, regulatory restrictions, loss of banking charter and even imprisonment.

Also, check out: “ Your A to Z Guide To Preparing Narrative for Suspicious Activity Report.”

ScanWriter Makes the Job Easier

FinCEN requires financial institutions to include all available information relating to the account and locations involved in the SAR.

This can be a daunting task. The financial data in large check fraud cases consists of mountains of documents including bank statements, deposit slips, wire transfers, handwritten checks, etc.

Sifting through this data, analyzing it and identifying potentially suspicious activity can take days and still be inconclusive.

Fortunately, there’s an advanced solution that automates data preparation and creates easily understandable visual representations of the data.

ScanWriter, developed by Personable, is rapidly becoming the essential asset-tracing tool for the investigation of money laundering and other financial crimes.

ScanWriter reduces the time and effort required to assimilate and analyze data in these important ways.

Data entry automation: ScanWriter can convert any paper document or digital file into normalized data on Excel in a matter of minutes without sacrificing accuracy. 

Whether the source is a huge file on a CD, individual PDFs or paper documents ScanWriter can capture the data and match it with individual bank statements.

Sorts data: ScanWriter can categorize transactions by type or customize categories according to the investigative strategy.

It creates an organized Excel spreadsheet with dates, descriptions, business names, amounts, balances and more in distinct columns. 

ScanWriter streamlines case workflow by automating the data capture process and generating reports which can be used to find connections and trends.

Provides enrichment: Standardizing and normalizing data for Excel provides an organized view of the information. ScanWriter takes this analysis capability one step further by integrating processed data with Power BI to generate visualizations of patterns, activities and relationships of the data (e.g. Flow of Funds).

Customizable to any case strategy, data enrichment can provide visual representations of connections, patterns and insights.

21 languages: ScanWriter supports 21 languages, including English, Spanish, French, Mandarin, Cantonese, Arabic and more.

Security: ScanWriter isn’t cloud-based. Perfect for high-security environments, it’s an on-premise solution that processes and saves all files locally.

Private companies, institutions and law enforcement agencies use our trusted software for all their financial investigations with assurance and confidence.

Easy-to-use interface: ScanWriter is a user-friendly software solution that makes it easy and fast to sort through and analyze any form of data.

Dedicated customer support: Our tech staff is available to support any needs or questions you might have.

ScanWriter can facilitate every step of an internal SAR investigation by sorting and analyzing the critical transactions in the report.

It sorts and spots inconsistencies, trends and patterns that can help institutions fight fraud and prepare data for deeper analysis.

Contact us today for a free demo and discover how ScanWriter can save your organization time and money with our data automation solutions.


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