Fighting Human Trafficking with Anti Money Laundering Regimes


According to International Labour Organisation (ILO) estimates, about 21 million persons across the globe are victims of trafficking. Some believe this figure to be an incomplete reflection of the harsh reality, with only a small percentage of victims getting identified. It is a highly lucrative business generating illicit profits to the tune of approximately USD 32 billion per year. With the total profits arising from illicit trades (including drugs, people, arms, fake goods and stolen natural resources) being estimated by the United Nations Office on Drugs and Crime (UNODC) at USD 130 billion, the estimated profits of human trafficking represent a significant proportion of that total.

Trafficking of human beings is fundamentally a profit–driven industry that relies significantly on access to financial institutions. It is a logical deduction then that denying criminals this profit, and disrupting the flow of finances in their trade would significantly compromise their very sustenance, and in the long-term help reduce the scale of these illicit operations.

The Financial Action Task Force (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering and terrorist financing, surveyed its member countries and published a report on money laundering risks arising from trafficking in human beings and smuggling of migrants. The experiences of the countries disclosed some common patterns: lack of adequate information about the number of persons trafficked; absence of accurate data relating to income generated from trafficking and how it is dealt with; limited cooperation between agencies investigating trafficking and laundering; lack of awareness amongst law enforcement/prosecution authorities etc.

A couple of months ago, the Central Government published its draft Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2016. Currently, the offence of trafficking in human beings is regulated by the Immoral Traffic (Prevention) Act, 1956 and certain provisions of the Indian Penal Code. The proposed bill, tipped to be the country’s first ever anti-human-trafficking law, seeks to create a comprehensive law to prevent and combat trafficking in India, and envisages the setting up of special investigative agencies, fast-track courts, an anti-trafficking fund, and anti-trafficking committees at the district, state and centre levels. While it is being lauded for shifting the discourse towards the promotion of welfare and rehabilitation of survivors of trafficking, it is also being criticized for leaving a large number of important questions unanswered.

A notable addition in the proposed bill is its attempt to deal with the property of offenders. To some extent, the Bill deals with the issues of confiscation, forfeiture and attachment of property of people convicted of human trafficking. So far, most global and national efforts to curb trafficking have focused on the crime of trafficking itself, and not on the proceeds derived from and invested in trafficking. However, enforcement investigations into large-scale organized criminal activities reveal that it is often the connection(s) made through financial records that help establish the identity of criminals responsible, and enable seizure of the tainted assets.

What does the proposed anti-trafficking bill envisage? Section 22 stipulates that where the appropriate government has reason to believe that any person has committed an offence under the (draft) Act, it may authorize the making of an application to the District Judge for the attachment of the money or other property which the said person is believed to have procured by means of the alleged offence (or other property of equivalent value if such money or property cannot be attached for any reason). Further, Section 20 of the Bill provides that where a person has been accused of committing the offence of using narcotic drugs, psychotropic or alcoholic substances for trafficking; or the use of chemical substance or hormones for the purpose of exploitation, his property may be confiscated (by the Special Court established under the Bill) if it is likely that the property will be dealt with in a manner that may frustrate the proceedings. If a person is convicted of the aforesaid offences, the Special Court is additionally empowered to order that any property belonging to him/her that was used for the commission of the offence or accrued thereby shall stand forfeited to the government.
Unfortunately, the Bill does not provide any guidance for the utilisation of the money seized by/forfeited to the government. This is an important resource in the hands of the government and should be utilized to fund state action to combat the crime of trafficking. It can be used to strengthen the enforcement and prosecuting agencies, and/or be deposited into the anti-trafficking fund proposed to be set up under the draft bill for the welfare and rehabilitation of the victims. Currently, the bill envisages credits to the fund in the form of voluntary donations, contributions or subscriptions made by individuals or organisations. Using monies recovered from perpetrators of the crime in rehabilitating the victims will help achieve restorative justice in the true sense of the term.
This Bill is an important first step in the right direction in so far as it recognizes that targeting the proceeds of the crime of trafficking is a quintessential component of the fight against trafficking itself, an offence driven largely by motives of profit. The next step in strengthening this framework is the active utilisation of money laundering laws to combat human trafficking and other related offences. While this nexus is relatively unexplored in India so far, various global organisations are working in countries across the globe to fight trafficking through the respective national anti-money laundering regimes.

India’s current anti-money laundering framework addresses the offence of human trafficking to some extent. The Prevention of Money Laundering Act, 2002 (“PMLA”), as amended in 2012, defines the offence of money laundering as any activity connected with the ‘proceeds of crime’ which in turn is defined as any property (or value of such property) derived directly or indirectly as a result of criminal activity relating to a ‘scheduled offence’. Scheduled offences are divided into two categories – some carry a monetary threshold of INR thirty lakhs to be involved in the offence for the provisions of the PMLA to be attracted, while others require no such threshold. Section 5 (Procuring, inducing or taking person for the sake of prostitution), Section 6 (Detaining a person in premises where prostitution is carried out), Section 8 (Seducing or soliciting for the purpose of prostitution) and Section 9 (Seduction of a person in custody) of the Immoral Traffic (Prevention) Act, 1956 are covered under the PMLA if the proceeds derived from offences under these Sections exceed INR 30 lakhs. Pertinently, trafficking of persons, per se, is not listed as part of the scheduled offences. Trafficking related provisions under the Indian Penal Code also do not find a mention under the list of scheduled offences.

International Practices

International experience has revealed that the use of anti-money laundering framework can help improve the detection  of  the  offence  of trafficking,  assist  in  broadening  investigation  of  trafficking  related offences, and support national and international cooperation and asset confiscation efforts through specialized anti-money laundering channels. Various international instruments also highlight the importance of targeting the money laundering aspect of criminal activity. The United Nations Convention Against Transnational Organised Crime of 2000 (signed and ratified by India) requires State Parties to adopt necessary legislations as part of their domestic legal framework that criminalize the act of laundering proceeds of crime, and urges them to cover within its ambit the widest range of predicate offences. Other international  instruments  include  the  Council  of  Europe  Convention  on  Laundering,  Search,  Seizure  and Confiscation of the Proceeds of Crime and on the Financing of Terrorism (2005) which also provides for confiscation measures to be taken at the national level and recommends that the signatories provide for mandatory confiscation of proceeds in case of serious offences, making a particular case for inclusion of the offence of trafficking in human beings in this regime.

The FATF conducted a survey among its member countries. Notably, majority of the jurisdictions that participated in the survey (38 out of 52) declared that there was no specialised unit investigating the laundering of proceeds of human trafficking. Thus, inter-agency and cooperation between the law enforcement agencies (for both – trafficking and laundering), judicial authorities and the financial intelligence units (at the national and international levels) is the need of the hour.

The United States of America has been working actively to ensure cooperation between different state agencies in its fight against human trafficking. Legislatively, human trafficking is a ‘specified unlawful activity’ under the nation’s primary money laundering law. Thus, transactions conducted with proceeds earned from trafficking humans, or used to further trafficking operations, can be prosecuted as money laundering offences. The UK, as well as few other nations, also already report suspected illicit activity connected to human trafficking under existing anti-money laundering regulatory regimes.

Further, the U.S. Department of Homeland Security (DHS) has made human trafficking and smuggling a priority through their “Blue Campaign” – a collaborative effort between DHS, world governments and non-governmental organizations. The DHS is also aiming to add human trafficking awareness training as part of basic training at the Federal Law Enforcement Training Centers. The US Immigration and Customs Enforcement Homeland Security Investigations (HSI) also emphasizes the importance of a law enforcement-financial industry partnership against smuggling and human trafficking. The agency’s Cornerstone initiative conducts investigations into a wide array of financial crimes, including trafficking and smuggling, while its Project STAMP (Smugglers’ and Traffickers’ Assets, Monies, and Proceeds) is dedicated to combating transnational criminal organizations involved in those activities by following the money trails they create. In June 2014, HSI launched Operation Coyote, targeting human smuggling organizations operating along the Southwest Border and internationally. The campaign also targeted human smuggling and trafficking illicit proceeds being moved through interstate funnel accounts. HSI seized more than $950,000 and 608 bank accounts from criminal organizations trying to exploit financial systems.

Way forward

To increase the possibility of identifying and confiscating the proceeds of human trafficking and consequently discouraging the activity of human trafficking, it is imperative to dispel the widespread belief within law enforcement agencies that the predicate offence is more important than the laundering of the proceeds thereof. To this end, the clear recognition of seizure and confiscation of the proceeds of crime in the Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2016 is a welcome step.

However, corresponding changes should be brought about in the PMLA to facilitate a more direct nexus between the two Acts – trafficking of human beings should be recognized as a distinct ‘scheduled offence’ under the scheme of the PMLA and should not require a monetary threshold to invoke the application  of  the  provisions  of  the  Act.  The arbitrary  threshold  of  INR  30  lakh  is  particularly problematic in case of the offence of trafficking in human beings, which is a direct deprivation of the most fundamental rights that are guaranteed to an individual. Any commission of this offence (regardless of number of persons trafficked or amount of money involved) should attract strict punishment and penalty.

Once the two legislations are brought in consonance with each other, the relevant authorities responsible for investigation and implementation of the respective frameworks will have to liaison closely to ensure successful prosecutions. The draft Bill of 2016 empowers the central/state government (as the case may be) to attach property procured through the offence of trafficking and the special court (to confiscate property in case of certain specified offences (detailed above)). The draft Bill also envisages the setting up of a Special Agency for investigation of offences thereunder. Under the PMLA, the central government is empowered  to  appoint  a  Director/Additional  Director/Joint  Director  who  can  pass  orders  for provisional attachment of property. It is also empowered to set up an Adjudicating Authority to whom complaints  can  be  made  if  any  offence  is  suspected.  The  PMLA  also  envisages  the  setting  up  of designated special courts to fast track the prosecution of money laundering cases. This multiplicity of agencies working on investigating offences under the two legislations mandates effective cooperation to be able to witness successful prosecutions. The Asian Development Bank, while highlighting the link between human trafficking and money laundering, also stressed on the need for close cooperation between different agencies, a joint plan for each investigation, close contact between liaison persons from different departments and a review of detailed material related to both – the trafficking and the financial laundering aspects.

The Bill is currently in its draft form and comments from the public stand closed for now. However, various NGOs have been pushing for a wider consultative process before the Bill is finally tabled in Parliament (tentatively scheduled for December 2016). A wider consultation is definitely a welcome step and if such a process were to be undertaken, the importance of including requisite mechanisms to effectively utilize the anti-money laundering framework to combat trafficking can hardly be emphasized enough.

Despite the fact that human trafficking in the second largest illicit business in the world (following drug trafficking), actionable information to fight it is in very short supply. Plugging the legislative gap by drawing a direct nexus between the anti-trafficking and anti-money laundering regimes will undoubtedly be a strong first step towards the ultimate aim of bridging gaps in the knowledge and capacity of practitioners and stakeholders who are working relentlessly to check abuses of human rights in India, while simultaneously ensuring a crackdown on money laundering activities fuelled by the proceeds of these offences.

*Kalpana Yadav is the Senior Program Manager at iProbono India.

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