Guest Author - Consuelo Herrera, CAMS, CFE
Forensic accountants see beyond accounting records.
I wish I had known what I know now about money laundering and other economic crimes. In the early 90s, members of an international ring recruited young women from Latin America and enticed them by offering a prosperous future and promised help them find them jobs overseas. I saw the three sides of the coin: the exploited women, the greedy and deceitful recruiter who sold them the idea that she had contacts in Europe with agencies of models, and a bank that received the proceeds of such horrendous crimes.
A woman escaped from the prostitution slavery to which she was subjected and helped the police dismantle such scheme. A happy ending foreign to many sex slaves who remain in darkness awaiting for an opportunity for regaining their freedom.
For iAbolish, “SEX SLAVERY finds women and children forced into prostitution. Many are lured by false offers of a good job and then beaten and forced to work in brothels. Some women are coerced by their own husbands, fathers, and brothers to earn money for the men in the family to pay back local moneylenders. In other cases, victims pay tens of thousands of dollars to get to another country and are then forced into prostitution in pay off their own debts. Women or girls can be plainly kidnapped from their home countries. An estimated two million women and children are sold into sex slavery around the world every year”.
The U.S. Dept of State Bureau of Consular Affairs warns about this type of fraud. It states that “Fraud is the misrepresentation of a fact through misleading statements or allegations or the submission of false documentation.”
The Trafficking Victims Protection Act of 2000 (TVPA) defines labor trafficking as: “The recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage or slavery.”
Some clues that may identify a possible trafficking victim:
O Accompanied by a controlling person or boss; not speaking on own behalf;
O Lack of control over personal schedule, money, I.D., travel documents;
O Transported to or from work; lives and works in the same place;
O Debt owed to employer/crew leader; inability to leave job;
O Bruises, depression, fear, overly submissive.
Link to Money Laundering
Money laundering is any act or attempt to disguise the source of money or assets derived from criminal activity. It can involve the proceeds of a wide range of criminal activities that produce large profits.
• Illegal arms sales
• Drug trafficking
• Human trafficking
• Illegal immigration
• Insider trading
• Computer fraud schemes
According to the US Dept of State, international trafficking in women and children, smuggling of migrants and contraband, money laundering, cybercrime, theft of intellectual property rights, vehicle theft, public corruption, environmental crimes, and trafficking in small arms cost U.S. taxpayers and businesses billions of dollars each year. Some experts estimate that non-drug crime accounts for half of the estimated $750 billion! of money laundered each year in the United States. The US Dept of State reinforces that “he events of 9/11 and their aftermath highlight the close connections and overlap among international terrorists, drug traffickers, and transnational criminals. All three groups seek out weak states with feeble judicial systems, whose governments they can corrupt or even dominate. Such groups jeopardize peace and freedom, undermine the rule of law, menace local and regional stability, and threaten the United States and its friends and allies.”
The article “Money laundering, gun-running, sex slavery” questions if Cyprus is becoming a tax haven. It considers the link between violence and money. According to the article, Cyprus, has a thriving sex trade that draws women from former Soviet states, justifying this assertion with a case where a Cyprus' immigration chief was reportedly jailed for 20 months after being found guilty of accepting bribes to issue work permits for foreign women to work in cabarets. According to its author, by 2003 some 2,000 women per year arrived in Cyprus to work in these clubs, often under duress, helping to generate $70 million per year in prostitution revenue plus fees for pimps who work in the women's home countries and broker the traffic.
Worldwide initiatives along with local initiatives and assistance programs are aimed to protect the US from such threats.
The United Nations Office on Drugs and Crimes UNODC defines human trafficking as "the acquisition of people by improper means such as force, fraud or deception, with the aim of exploiting them. Smuggling migrants involves the procurement for financial or other material benefit of illegal entry of a person into a State of which that person is not a national or resident."
All countries are exposed to these crimes. The challenge is to target the criminals who exploit desperate people and to protect and assist victims of trafficking and smuggled migrants, many of whom endure unimaginable hardships in their bid for a better life.
The role of forensic accountants is recognized across the globe. For example, the Scottish Crime and Drug Enforcement Agency, SCDEA highlights the contributions of forensic accountants. SCDEA states that its Forensic Accountancy has engaged in a number of money laundering investigations utilizing for the first time an ability to use evidence of complex audit trails in the support of money laundering prosecutions against major criminals.
Money laundering is linked to fraud, human trafficking, embezzlement, and other economic crimes. Forensic accountants can make a difference by helping law enforcement and investigators to bring crooks to justice.