How The Private Sector Is Protecting Children - A Q&A With Barry Koch

In recognition of National Human Trafficking Awareness Month, ECPAT-USA is presenting a series of interviews with leaders in the private sector about how they are working to end child sex trafficking and exploitation in their industries. Here, we speak with Barry Koch, a consultant and private attorney who is an expert in the field of anti-money laundering compliance and risk management.

Can you tell me about when you first became aware of trafficking as an issue in the U.S. and what compelled you to get involved?

I first became aware of human trafficking as an issue in the U.S. about ten years ago, and I felt compelled to get involved in addressing the problem when I realized that trafficking in human beings is a crime where the world’s worst people are taking advantage of the world’s most vulnerable. Although slavery is not legal anywhere in the world, it’s happening everywhere in the world, with an estimated 40 million people being exploited for sex or forced labor; and trafficking is one of the fastest growing crimes. I was working in the anti-money laundering compliance area of a large international bank when several of us decided to try to develop a transactional model to help us identify how traffickers might be moving their money. We understood that trafficking is a crime motivated entirely by greed—unlike many other crimes, it is not committed for revenge, or to make a political statement, or because someone is being blackmailed, but rather it is exclusively about the money. So we felt that if we could identify any of the traffickers’ funds moving through the bank, we could help law enforcement seize those criminal proceeds and that would be an effective way to disrupt the traffickers’ business. Working with our IT colleagues and in partnership with law enforcement, we developed a methodology to identify transactional traits and customer and account characteristics that were “red flag” indicators for possible labor and sex trafficking. And after investigating these red flags, we shared our conclusions with law enforcement (consistent with applicable privacy laws), which helped them initiate and pursue criminal cases, which in turn led to arrests, asset forfeitures and victim rescues.

This is an aspect of the issue that I imagine many people have not thought about before. Can you explain generally how financial data and records can be used to track and prosecute traffickers?

Financial data is a powerful tool that investigators in the financial industry and in law enforcement can utilize to combat the business of human trafficking.  Financial records (and reports of suspicious activity that banks file with the government) can be used to identify victims and co-conspirators, to corroborate victim testimony and to refresh a victim’s recollection at trial, and to prove coercion—a required element in a criminal charge.  The records and reports can also assist in providing a basis for asset forfeitures (that is, seizing assets that may have been used by the traffickers). This, too, is an effective and powerful disruptor of the traffickers’ business, because the traffickers’ property that is subject to these asset forfeitures can include real property (houses, restaurants, stores, hotels, farms, and office parks); tangible personal property (cash, jewelry, art, boats, airplanes, and cars); and intangible personal property (professional licenses like medical, pharmacy and liquor licenses), as well as bank and investment accounts, business entities and business permits, website domain names, and virtual currency. Lastly, if witnesses are reluctant to testify—because of a threat of violence against them or family members, or the risk of being deported, or even because of the fear of being prosecuted themselves—the reports filed with the government and the underlying financial records can be used to pursue other criminal charges that may not require testimony.  For example, prosecutors may bring a case against a trafficker for tax evasion, structuring and money laundering, where the trafficker’s tax returns report minimal income and assets, yet the financial records refute those tax returns by illustrating a lavish lifestyle.

Why is it important for others in the banking industry to get involved with anti-trafficking work?

There are at least two compelling reasons (among many) that I’ll mention.  First, there is the moral imperative to end slavery. That reason speaks for itself and is irrefutable. And second, for those who are not persuaded by the inherent value of “doing the right thing”, the business of human trafficking is economically inefficient on a macro scale, creating a significant drag on global economies and capital markets. For example, recent research in the UK estimates the annual cost to the government per trafficking case (law enforcement, medical and social services, etc.) to be GBP 328,700; there is ample evidence of lost productivity and diminished economic multiplier effects as a result of locking up human capital.

How have you seen the understanding of trafficking in the U.S. evolve since you began working on this issue?

Over the past ten years, I’ve seen a heightened awareness of the role that the financial sector can play in combatting the problem, and there are several effective public sector/private sector partnerships that have formed to share investigative best practices and substantive expertise. It’s critical to sustain these efforts and to keep up with emerging methods that the trafficking organizations utilize, such as the use of crypto currency and advertising on the dark web, but there is definitely a positive momentum in this direction.

Based on your experience thus far, what gives you hope in terms of future work on this issue?

I’ve seen a strong commitment among many of the critical stakeholders—law enforcement, financial institutions, victims’ service providers, NGOs—to identify and implement effective responses to the goal of eradicating modern slavery.  There’s much more work to be done, especially from the perspectives of prosecuting more cases, helping survivors reintegrate into mainstream society (with an attendant reduction in the risk of their being re-victimized), and bringing a victim-centric approach to the criminal justice system when dealing with survivors.  But I’m encouraged at the efforts to date and the level of determination, in the U.S. and elsewhere, to make a difference.

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Barry M. Koch is an independent consultant and private attorney recognized internationally as an expert in the field of anti-money laundering compliance and risk management. He most recently served as an Assistant District Attorney and Counsel to the Investigation Division in the New York County District Attorney’s Office. He is a founding member of the U.S. and European Bankers Alliances Against Trafficking, and he has presented the Financial Footprint of Human Trafficking to legislators, regulators, bankers, NGOs, and law enforcement audiences around the world. Mr. Koch recently served as a Commissioner on the Financial Sector Commission on Modern Slavery and Human Trafficking (the Liechtenstein Initiative), and he is a past Chairman of the Advisory Board of the Association of Certified Financial Crime Specialists. A law professor in New York City, he is also a former Chairman of the New York State Bar Association’s Committee on the United Nations, and a former Chairman of The Consular Law Society, Inc. He has held numerous senior Compliance and Legal positions with global financial institutions, and he is a board member of several US-based not-for-profit organizations combatting human trafficking through the finance sector by “following the money.”

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