Following the Money: Detecting Financial Flows Linked to Human Trafficking and Forced Labour

Human trafficking and forced labour generate an estimated $236 billion annually in illegal profits, according to the International Labour Organization — making it one of the most lucrative criminal enterprises globally. Yet financial institutions detect and report only a fraction of the associated financial flows. The disconnect between the scale of the crime and the effectiveness of financial detection represents a critical failure in the global anti-financial crime framework.

The financial signatures of human trafficking are present in the banking system, but they are often subtle and easily obscured among legitimate commercial transactions. Recruitment fees paid by victims, wages withheld and redirected by traffickers, rental payments for overcrowded accommodation, and the laundering of proceeds through cash-intensive businesses all generate detectable patterns — but only if institutions know what to look for and have the analytical capability to find it.

Growing regulatory expectations, combined with increasing public awareness and enforcement activity, are placing financial institutions under greater pressure to demonstrate that their AML frameworks can identify trafficking-related financial flows. This is not merely a compliance obligation — it is an ethical imperative that goes to the core of what financial crime controls are designed to achieve.

Regulatory, Enforcement, and Market Context

FATF has published dedicated guidance on detecting the financial flows of human trafficking, identifying over 50 red-flag indicators spanning customer behaviour, transaction patterns, and business relationships. The guidance calls on financial institutions to integrate trafficking-specific scenarios into their transaction monitoring frameworks and to train staff to recognise the indicators during customer interactions.

In the United Kingdom, the Modern Slavery Act and associated regulatory guidance require financial institutions to assess their exposure to modern slavery risk — both in their own operations and in the transactions they facilitate. The Joint Money Laundering Steering Group guidance includes specific sections on human trafficking and forced labour indicators. The FCA has signalled that it expects firms to demonstrate how their financial crime frameworks address these risks.

The US Treasury's Financial Crimes Enforcement Network has issued multiple advisories on human trafficking and forced labour financial indicators, most recently expanding the scope to cover trafficking linked to agricultural supply chains and domestic service industries. FinCEN data shows a 45% increase in human trafficking-related Suspicious Activity Reports between 2023 and 2025, suggesting growing awareness — but still far below the estimated scale of the crime.

What the Data Is Showing

The ILO's Global Estimates of Modern Slavery indicate that 27.6 million people are in forced labour globally, with 17.3 million exploited in the private economy. The financial flows generated by forced labour are concentrated in five sectors: domestic work, construction, manufacturing, agriculture, and sexual exploitation. An estimated 86% of forced labour occurs within the private economy, meaning the associated financial flows pass through commercial banking channels.

Research by the Liechtenstein Initiative's Finance Against Slavery and Trafficking programme found that fewer than 1% of global banks have implemented dedicated human trafficking detection scenarios in their transaction monitoring systems. Of those that have, the detection rates are significantly higher — demonstrating that the gap is one of implementation rather than technical capability.

Implications for Financial Institutions

Financial institutions must move beyond generic AML monitoring to implement specific detection scenarios for human trafficking and forced labour. This includes monitoring for patterns such as multiple individuals' wages being deposited into a single account, payments to labour recruitment agencies in high-risk jurisdictions, rental payments inconsistent with the stated number of occupants, and cash deposits from businesses in sectors with high trafficking prevalence.

Collaboration is essential. No single institution can detect trafficking networks operating across multiple banks and jurisdictions. Public-private partnerships provide critical forums for sharing intelligence on trafficking financial typologies.

Beyond detection, institutions should consider their broader role in combating trafficking through supply chain due diligence, lending assessments, and corporate responsibility frameworks. The financial sector's exposure to trafficking risk is not limited to transaction monitoring — it extends to the clients they serve and the industries they finance.

Conclusion

Detecting the financial flows of human trafficking and forced labour is one of the most morally consequential challenges facing the financial crime compliance profession. The tools, typologies, and intelligence-sharing frameworks exist to make a meaningful difference. What is needed is institutional commitment — to invest in dedicated detection capabilities, to train staff, and to treat this crime type with the seriousness it demands.

Suggested Next Steps

• Implement dedicated human trafficking and forced labour detection scenarios in transaction monitoring systems, aligned to FATF and FinCEN red-flag indicators.

• Train front-line staff, particularly in commercial banking, to recognise the behavioural and financial indicators of trafficking during customer interactions.

• Engage with public-private partnerships and intelligence-sharing initiatives to contribute to and benefit from collective detection efforts.

• Assess your institution's exposure to trafficking risk through lending and supply chain relationships, incorporating modern slavery due diligence into credit and onboarding processes.

Sources: ILO Global Estimates of Modern Slavery 2025, FATF Guidance on Financial Flows from Human Trafficking, FinCEN Advisories on Human Trafficking, FAST Initiative Research Reports, UK JMLIT Case Studies, JMLSG Guidance.

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