International money laundering, part 1 of 2

The human toll

By Alani M. Mundie, CFE

International money laundering plays a major role in the financing of numerous illicit activities that threaten domestic and global financial systems. Human trafficking, one such illicit activity, is becoming ever more profitable and prevalent. In fact, it has become the third-largest source of income for organized crime groups after drugs and arms trafficking.

MayJune-woman-victim-1When we think of the average life of a 12-year old girl, rape and forced prostitution aren't what come to mind. But for many girls, that describes the devastating reality they're forced into because of the growing prevalence and profitability of human trafficking. 

According to the Oct. 22, 2008, Al Jazeera article, "Child sex trade soars in Cambodia," reporters going undercover found girls as young as 14 forced to work as prostitutes in Cambodia. "Al Jazeera filmed secretly at several brothels, and in each case found much the same thing — rooms full of young women in their early 20s, as well as teenagers. 

"For my virginity they gave me $200," said Ya Da, a 16-year-old former prostitute, according to Al Jazeera.

Ya Da's case is indicative of more than 12 million trafficked persons in the world who are subject to forced prostitution or labor.

To traffickers, people like Ya Da are nothing more than dollar signs. Each year, profits from human trafficking total approximately US$39 billion. This astronomical amount of illicit funds is then laundered into the worldwide financial system, adding the global economy to the long and growing list of human-trafficking victims.


Human trafficking is a multibillion-dollar form of modern-day slavery. According to the International Labor Organization (ILO), at least 2.45 million persons are currently exploited as victims of human trafficking. Recent estimates by the ILO place its value at US$39 billion each year. However, because billion-dollar profit margins can't legally enter financial institutions unreported, human traffickers resort to money-laundering schemes. The most common trends involve wire remittance, money transfers, cash couriers, the structuring of transactions and the use of false identification documents. 

For the first time ever, the U.S. Department of State ranked the U.S. in 2010 as susceptible to human trafficking. It's important that U.S. policymakers understand the mechanisms by which illicit proceeds of human trafficking make their way into U.S. financial institutions. 

Part 1 of this article focuses on the global impact of the relationship between international money laundering and human trafficking, including: 1) the perpetration, costs and trends of money laundering and human trafficking offenses 2) the efforts of institutions in the global governance of anti-money laundering and human trafficking, specifically the Financial Action Task Force (FATF), the United Nations Office on Drugs and Crime (UNODC) and Interpol, in combating these crimes and 3) its impact on the U.S. and its financial systems. 


Part 2 in the July/August issue will focus on: 1) U.S. participation in the international institutions listed above to detect and deter these insidious crimes and U.S. policy compliance with global money laundering and human trafficking standards and 2) the challenges that international cooperation, lack of global awareness and low prosecution rates present for future policymakers to curtail these crimes.  

For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.