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In the murky world of financial crime, human trafficking, people smuggling and modern slavery surely stand out as the most callous and despicable acts perpetrated by organised crime syndicates. From the mass drownings that occur across the Mediterranean and English channel on an almost daily basis to the many child trafficking rings exposed across the world, the depravity of human trafficking never ceases to shock and amaze us.

This article looks at the sobering state of human trafficking in Africa while outlining the case for how financial crime and anti-money laundering experts act as a crucial intermediary in stopping human trafficking ‘in its tracks’.

A Financial Crime worsened by the COVID-19 Pandemic

Human trafficking remains a terrifying issue that does not escape colour, class or creed, and has unfortunately been further exacerbated by the COVID pandemic, as Governments and expert agencies focus on the economic and vaccination response. As the criminal syndicates who fuel this illicit trade increasingly adopt the dark web to conduct their activities, financial crime and compliance officers now play a critical role, alongside law enforcement, in identifying suspicious transactions and flagging individuals who may be complicit in human trafficking. 

The Extent of Human Trafficking in Africa

On the same day that the Ghislaine Maxwell sex-trafficking trial in connection with Jeffrey Epstein, is set to begin in New York, African statistics paint a grim picture of its proliferation across the continent. According to the Traffik Analysis Hub in the UK, and the African Institute for Security Studies, it is estimated that each and every year, an additional 3.5 million African citizens are being trafficked, while close to nine million Africans are currently being enslaved. Almost every African state is identified as either a source, transit, or destination country for victims, making this a significant issue for all nations to address.

The Role of the Public and Private Sector in Fighting Back

The global crime syndicates involved in human trafficking, operate through a veiled cloak of online secrecy that is almost impossible to intercept. However, the one area of opportunity to disrupt and dismantle these syndicates is through the monitoring of the financial transactions of suspected individuals. Compliance and financial crime professionals can assist in identifying, flagging and reporting suspicious activities through the following methods;

• Identify red flags and report suspect financial activities before they are processed and cleared. 
• Financial companies to empower regulatory and compliance teams with the relevant resources to take reporting action on each individual suspicious activity
• Enhanced Sanctions screenings process while onboarding new customers. 
• Leverage the latest technologies and localised platforms to help identify risks and raise red flags

RAHN Financial Crime – Turning the Tide against Human Trafficking

The transaction monitoring capabilities of the Rahn Financial Crime Platform enables organisations to identify specific types of transactions which can be associated with Human Trafficking. This is done by monitoring transactions to identify suspicious activity known to resemble transactions that are concluded by traffickers. An example of such would be transactions where large deposits are immediately withdrawn, close to international borders. In this case, the location of the branch where the transaction was executed, the size of the withdrawal (including aggregation) and the timing of the transaction will all be considered to identify potentially suspicious activity.

RAHN Consolidated Pty Ltd. is a proudly South African company, committed to equipping financial professionals with real-time resources to take the fight against human trafficking rings and other organised crime syndicates. Contact us today to explore how we can empower your business with a financial attack strategy to help put an end to human trafficking.

Sanctions screening is a process undertaken by financial institutions, with the help of specialised software, to help them identify and detect any potential financial crimes, either while onboarding a new client, or screening an existing customer. It plays a crucial role in trying to prevent money laundering, while also forming part of the Customer Due diligence process for the banking industry, insurance companies and FinTechs who act as registered credit providers.

Keeping your ‘Eyes on the List’ in Testing Times

One would safely assume that Sanctions screening plays an everyday role in the compliance and regulatory procedures of institutions that manage the transactions of prominent, influential and politically-connected people. However, as recently outlined in our financial crime compliance case study, anti-money laundering control measures are coming under closer scrutiny by the South African Reserve Bank. Companies that fail to meet the high standards required, run the risk of severe financial penalties for any oversight. While the pandemic, and the resultant economic crisis, has forced many institutions into major financial cutbacks and retrenchments – the result has been a severe erosion in the quality of compliance and regulatory affairs of major players in the financial system.

Sanctions Screening  – Compounded by the Crypto-Explosion

Perhaps the biggest differentiator between cash transactions and cryptocurrency has, up until now, been the wide gap in the sanctions compliance requirements between fiscal and digital assets. With more and more people now joining the “crypto-revolution”, and an increasing number of rogue actors (and even Governments) using ‘crypto’ to either hide or move, their criminal transactions, something has got to give, very soon.

Crypto-Risk is set to become a significant part of sanctions screening in the next decade. It remains to be seen how compliance will evolve. What we do know, however, is that cryptocurrencies are here to stay and will require the same standard of financial crime compliance as the brick and mortar institutions around the world. Watch this space!

Introducing RAHN Monitor

If your company is still looking for a localised solution to meet the strict SARB requirements for financial crime compliance, your search ends here. RAHN monitor is a real-time software application that monitors identifies, mitigates and analyzes your sanction screening outcome data. The software team at RAHN have simplified the approach to sanctions screening with a proudly South African solution that; enhances data quality, stops money laundering, and always ensures company compliance.

RAHN monitor consists of three main components, which include 

– a sanctions dataset that is updated to daily synchronize with the majority of the sanctions listing. 

– a search function.

– the ability to develop custom internal datasets. 

The search function allows users to search for specific individuals via the user interface, while compliance officers and managers who need to confirm a sanctions-hit can use the app before making an onboarding or instant decision. You can manage your account, buy more searches, clear your local database, by a license for the application, or view search history

RAHN Consolidated – Sanctions Screening, Simplified

At Rahn, we believe that financial crime compliance software should be accessible and affordable to all financial institutions struggling to keep up in this fast-paced, ever-changing landscape. Discover how we can help your business analyse, detect and mitigate against sanctioned individuals, or avail of a host of specialised consulting and recruitment services which can take your business forward. Contact our Team today to explore your options, or request a demo.

The South African Reserve Bank recently issued a notice declaring that administrative sanctions had been imposed on two life insurers following an investigation that found weaknesses in their anti-money laundering control measures. This case study, which forms Part 2 of our Financial Crime Compliance series, takes a closer look at these sanctions, specifically the section 28 finding, and how the Rahn Financial Compliance Platform can be employed to strengthen anti-money laundering control measures in your business.

Section 28 of the FIC Act

“28. Cash transactions above the prescribed limit 

An accountable institution and a reporting institution must, within the prescribed period, report to the Centre the prescribed particulars concerning a transaction concluded with a client if in terms of the transaction an amount of cash more than the prescribed amount—  

(a) is paid by the accountable institution or reporting institution to the client, or to a person acting on behalf of the client, or to a person on whose behalf the client is acting; or

(b) is received by the accountable institution or reporting institution from the client, or from a person acting on behalf of the client, or from a person on whose behalf the client is acting. 

28A.  Property associated with terrorist and related activities and financial sanctions pursuant to Resolutions of United Nations Security Council 

(1) An accountable institution which has in its possession or under its control property owned or controlled by or on behalf of, or at the direction of—  

(a) any entity which has committed, or attempted to commit, or facilitated the commission of a specified offence as defined in the Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004;

(b) a specific entity identified in a notice issued by the President, under section 25 of the Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004; or

(c) a person or an entity identified pursuant to a resolution of the Security Council of the United Nations contemplated in a notice referred to in section 26A(1), must within the prescribed period report that fact and the prescribed particulars to the Centre.  

(2) The Director may direct an accountable institution that has made a report under subsection (1) to report —

(a) at such intervals, as may be determined in the direction, that it is still in possession or control of the property in respect of which the report under subsection (1) had been made; and

(b) any change in the circumstances concerning the accountable institution’s possession or control of that property.

(3) An accountable institution must upon—

(a) publication of a proclamation by the President under section 25 of the Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004; or

(b) notice being given by the Director under section 26A(3),  

scrutinise its information concerning clients with whom the accountable institution has business relationships to determine whether any such client is a person or entity mentioned in the proclamation by the President or the notice by the Director.”

What must happen, in order to meet Financial Crime Compliance

An accountable institution must monitor all incoming and outgoing transactions concluded with or by clients to identify cash transactions in any of the institution’s bank accounts, this is applicable retrospectively and ongoing. Once identified it must be determined if any of the transactions breach the stipulated threshold level. In the event of a breach, the CTR report must be completed and submitted via the GoAML portal to the regulator. It is at this point where many institutions run into issues in so far as identifying the client who made the deposit (banking industry excluded). The issue here lies in the fact that many clients use their own reference to complete the deposit slip which can be difficult to assign to a specific client.

Many accountable institutions are made up of numerous other reporting institutions which may or may not have various bank accounts which serve some purpose within the business context. This leads to further complications which may lead to adverse findings during a regulatory visit.

The next part of the section stipulates the actions which are required when it is identified that an accountable institution is in control or manages properties (investments, insurance policies, pension funds, etc.) that belong to an individual who is listed under the Protection of Constitutional Democracy against Terrorist and Related Activities Act and the UN Security Council listings.  This follows the same logic as the DPIP case study in so far as identifying clients who are listed as sanctioned individuals and may fall under the scrutiny of financial crime and money laundering risks. Accountable institutions are expected to screen their current and prospective clients against these listings to ensure that the property of listed individuals under their control is reported to the regulator and that any lawful instruction pertaining to these assets is executed in accordance with the Act. 

How does the Rahn Financial Crime Compliance Platform solve for this?

The transaction monitoring module of the RAHN Financial Crime Compliance platform has been designed to consume the account statements as supplied by ABSA, FNB, Nedbank and Standard Bank. We have working relationships with the teams within these banks to ensure automated integration and consumption of the data. Cash threshold breaches are automatically identified via overnight batch runs and can be applied historically. Submission of CTR reports is automated through the workflow process in so far as population and preparation of the XML templates with built-in gated reviews to ensure all reporting is transparent and visible to senior management committees and compliance functions.

The bank account management module is the direct result of the need to prove coverage in complex banking and treasury environments. Each bank account is managed and maintained within the context of the reporting institution to which it belongs and the accountable individual who controls the account.

The bank reconciliation module was developed to assist in identifying the client who made the deposit. The system makes use of the same matching engine as used to identify sanctioned individuals and thus provides an outcome that follows an accuracy hierarchy. Unmatched or low accuracy matches are resolved through the workflow process where business SMEs are empowered through exception reporting to identify and clear these cases.

The sanctions matching engine is again applied in the same manner as case study 1 and thus provides the accountable institution with hits against the required sanctions listings. This enables the institution to identify potential terrorist and related activity, and financial sanctions within the client base and thus ensure compliance. The portfolio module allows case managers to build a complete view of a client’s portfolio and thus enables the development of a holistic property holding for everyone who poses the potential to qualify under clause 28A of the Act.

Conclusion

Under Section 28 of the Act, accountable institutions are expected to develop an effective process to identify, manage and monitor cash transactions and identify property holdings for individuals who are deemed to be involved in terrorist and related activities. The Rahn Compliance Platform can assist in this through:

• Identifying cash transactions which breach the prescribed threshold entirely or through aggregation.
• Identify the client who made the deposit through the bank reconciliation module and or the exception workflow process.
• Automated CTR reporting following an approval workflow process and uploaded via the GoAML portal.
• Identification of individuals who are listed on the specified sanction lists with automated workflow process to notify senior management and responsible committees.
• Portfolio view build up capability to identify and ring fence assets belonging to individuals identified under point 4 above.

Tackle Financial Crime and mitigate your Company’s Risks with RAHN

Contact us today at [email protected] to discuss your specific requirements and desired outcomes.