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The article entitled “International Money Laundering” written by Alani M. Mundie outlines the problem of financing various illicit activities on the global level. Mundie emphasizes the critical importance of money laundering operations in the human trafficking business that has become increasingly lucrative over recent years. The immense amount of human trafficking profits is integrated into the global financial system. Thus, money laundering has a profound impact on the state of the global economy, as well as on the economy of the U.S.
Mundi cites an article from Al Jazeera covering the issue of the child sex trade in Cambodia. Numerous reported examples of this type of illegal business demonstrate that to human traffickers people truly represent the direct source of immense profit. It might be called slavery of the twenty-first century, as the numbers reported by the International Labor Organization indicate 2.45 million of exploited people, yielding approximately 39 billion dollars per year.
However, such an amount cannot enter the financial system undetected. Thus, human traffickers employ an array of money laundering methods: cash couriers, transaction structuring, wire remittance, and false identities. The author of the article emphasizes how important it is for the government to gain a deeper understanding of the human trafficking system to prevent money-laundering schemes.
Money Laundering Detection System
A money-laundering scheme usually comprises three steps: placement, layering, and integration. Financial institutions abroad are chosen as the primary locations, with suitable back secrecy regulations and a sufficiently stable economic system. Due to the secrecy and efficiency of money laundering operations, it is rather difficult to determine the exact amount in question.
While identifying the primary source of illicit financial operations can potentially lead to uncovering a great number of crimes, it is a rather difficult task. There are many opinions on what are the most efficient tracing techniques: tracing the geographical location, analysis of the connections in financial records, and the importance of regional trends. Certain experts claim that the combination of these approaches might yield the most significant results. For instance, human trafficking in both North and South America is closely tied to casinos, wire transfer services, and import/export companies that help perform their schemes and remain undetected.
However, the author of the article points out that certain trends that have recently emerged on the global market significantly hinder the process of tracing and detection of money laundering schemes. It is increasingly common for the black market to use the US dollar for the transactions, technological progress provides endless possibilities of instant transfer of funds on a global scale and an increasing number of financial locations that help money launderers maintain the clandestine nature of their operations. Mundie points out that even though after the events of 9/11 the security protocols were improved and global anti-money laundering efforts were strengthened, the problem is far from being solved.
In 2003, the United Nations Convention against Transnational Organized Crime developed the first global legal method of human trafficking prevention: Protocol to Prevent, Suppress, and Punish Trafficking in Persons. A uniformity of human trafficking crimes was established to improve international cooperation. The Protocol specified the characteristics of human trafficking crimes, including the notion of exploitation.
The 2010 report of the U.S. Department of State read that in 2009, the number of adults and minors engaged in forced labor and prostitution amounted to 12.3 million people, with sexual exploitation being the primary goal of human trafficking operations. Among other activities of trafficked workers are domestic servitude, manufacturing, janitorial services, hotel services, club dancing, etc. Mundie explains that the increasingly globalized economy is the cause of an increase in illegal movements from poorer to wealthier countries, with the U.S. being the main destination.
Approximately fifty thousand people are estimated to be trafficked into the U.S. each year, mainly children and women for domestic labor, agriculture, and sexual exploitation. Trafficked workers are brought mainly from countries such as Thailand, Mexico, Philippines, Haiti, India, Guatemala, and the Dominican Republic. Moreover, this type of crime can occur on a domestic level as well. In 2010, the efforts of the U.S. system of human trafficking prevention were recognized as meeting the necessary standards.
The most important institutions in the money laundering detection and prevention are the Financial Action Task Force (FATF), Interpol, and the United Nations Office on Drugs and Crime. Established in 1989, the FATF is an inter-governmental institution. Its goal is to develop national and international Anti-Money Laundering (AML) guidelines, to promote the legislative reform in AML and anti-terrorism policies. The FATF developed a compilation of recommendations of universal character, helping policymakers around the world detect and prevent money laundering, as well as other illicit financial operations.
United Nations Office on Drugs and Crime, formed in 1997, pursues the policy of fighting international crime on the level of global cooperation. Its purpose is to assist the governments of over 150 countries in dealing with difficulties brought about by illicit activities such as human trafficking, drug, and arms trafficking, and to upgrade their knowledge on the evolution of criminal schemes, e.g. cybercrime. The organization holds 54 offices around the world.
The steps undertaken by the UNODC to help resolve the global problem of money laundering and terrorism financing include AML measures implementation, financial activity monitoring, member nations’ responses analysis, raising public awareness, and coordinating various initiatives. The program developed to prevent human trafficking is known as the Framework for Action.
Interpol comprises 190 member states. Uniformity of information management is the principal asset of this international police organization. Its technology allows all members to access a universal database to screen the immigration network to detect suspicious activities. The possibility of instant sharing of information among the country members facilitates the process of crime detection.
Operation Supersonic was initiated after the kidnapping of a child in Mexico. Due to international cooperation, a large-scale human trafficking system was revealed, wherein young girls over 18 were brought to New York and forced to engage in prostitution. The traffickers not only subjected the victims to sexual exploitation but also violent treatment, physical abuse, and abortions. The lead defendants were sentenced to 50 years of imprisonment for sex trafficking.
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As a result, 25 victims were rescued. Due to the efficient cooperation between the U.S. and Mexico, the financial details of the scheme were revealed. The discovered money transfer receipt amounted to two hundred thousand U.S. dollars from 1998 to 2004. It was also suspected that these illicit activities could have begun even several years earlier.
Money laundering is a key issue in the detection and prevention of financial crimes, human trafficking, and terrorism. The substantial scope of the problem is caused by advanced technology, globalization, and proliferation of bank secrecy havens. International organizations have developed uniformed instruments to join the efforts in fighting criminal activities.
Due to the global scale of cooperation, the developed programs yield significant results. By adopting uninformed legislation and developing databases and efficient data sharing systems, international organizations facilitate the process of detection and prevention of money laundering and human trafficking crimes. Although there is yet much to be done to detect and deter the mentioned criminal activities, the existing system of cooperation provides a solid foundation for further improvement.