A primer on human trafficking, human smuggling and money laundering

By Christine Duhaime | December 4th, 2010

Human Trafficking & Money Laundering

Human trafficking is the second largest illicit business in the world, after drug trafficking, generating as much as US$40 million annually in proceeds of crime that are laundered through the legitimate financial system.

It is a modern form of slavery, defined as any act that involves the transport, harbouring, or sale of persons through coercion, force, kidnapping, deception or fraud, for the purposes of placing them in a situation of the forced provision of services that may include one or more of prostitution, non-prostitution sexual services, domestic servitude, debt bondage or other slavery-like practice.

All human trafficking activities involve money laundering. The proceeds collected from the criminal activity are transformed by criminals into apparently legitimate money or other assets. In North America and the EU, traffickers tend to use the proceeds of their criminal activities to invest in cash intensive businesses, such as nightclubs or strip bars, and later, in real estate. To avoid detection, they tend to wire funds through money services businesses and send money across the border using international courier services.

Until recently, money laundering activities have not been used frequently enough to flush out human trafficking by law enforcement agencies but that is slowly changing as reliable money laundering and human trafficking typologies are developed.

Money laundering may also occur in human smuggling operations and they include the use of funds paid to smugglers, the use of funds paid to procure supplies or boats for smuggling, or the use of funds from terrorists or terrorist organizations.

With respect to Canada, like the U.S., it is a source, transit and destination country for human trafficking. Aboriginal women and girls are found in conditions of commercial sexual exploitation across the country.  Canada has the unfortunate distinction of being a significant source country for child sex tourists –  those are Canadian men who leave Canada to holiday abroad to engage in illegal sex with children.

Difference between Human Smuggling & Human Trafficking

Human smuggling and human trafficking are not the same:

  • Human smuggling involves the illegal movement of people across borders and is by definition, international. Unlike trafficked persons, the smuggled person usually consents to being smuggled and pays large sums of money to the smugglers;
  • Human trafficking, on the other hand, can be local, national or international – a person may be trafficked from a small town to a large city within the same country, or trafficked to another country;
  • People who are smuggled are not deprived of liberty when they arrive at their destination, whereas those who are trafficked are deprived of their liberty in one of several ways – they may be coerced, threatened or physically abused and are usually forced to provide free labour or services, forced into the sex trade, or forced to pay substantial sums to the traffickers for long periods of time;
  • The destruction of identification or travel documents is a sign of human trafficking, not usually smuggling. Trafficked persons are usually ordered to destroy their travel documents to protect the traffickers. Often the traffickers will destroy the travel documents of the persons they are trafficking as a means of controlling them; and
  • A smuggling operation can become a trafficking operation. Migrants may agree to be smuggled on a migrant ship and once on board, become victims of trafficking. This can happen if the smugglers force migrants to provide services (often sexual), labour, or payments of some kind on the vessel or after arrival in the destination country under circumstances where the migrants fear for their safety or that of someone known to them if they refuse to provide that service, labour or payment.
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