Forced Labor

Forced labor generates illicit proceeds that qualify as a predicate offense for money laundering.

Shell or front companies pretend to conduct legitimate operations and misrepresent beneficial ownership to financial institutions, concealing the forced labor aspect. By posing as lawful employers, they channel withheld wages through the system under the guise of standard payroll or corporate income.

Criminals exploit payroll services and business banking products to commingle forced labor proceeds with legitimate wage payments, masking the illicit origin. By labeling withheld or underpaid wages as normal payroll or operating income, they exploit the inherent reliance on self-reported wage data and business activity within these products.

Aggregates press articles, lawsuits, and other public legal records highlighting alleged or confirmed misconduct. Negative media coverage or legal actions related to labor exploitation can indicate forced labor activity generating illicit proceeds.

Includes financial statements and tax filings documenting revenues, expenses, and payroll costs. Comparing these disclosures with known industry benchmarks can reveal underreported wages or hidden profits associated with forced labor practices.

Captures details of financial transactions, including timestamps, amounts, currencies, and involved parties. These records help identify unusual wage payment patterns, large cash withdrawals, or the commingling of legitimate payroll with forced labor proceeds. By analyzing transaction flows, investigators can detect structuring or layering schemes associated with forced labor earnings.

Contains detailed information on employees, including identities, roles, and wages. These records can reveal inconsistencies in reported payroll expenditures, such as underpayment or 'ghost' employees, commonly seen in forced labor operations. Cross-referencing employee rosters with actual labor output helps detect exploitation.

Provides data on a company’s commercial operations, revenue figures, operating expenses, and other key metrics. By comparing declared labor costs with industry norms, investigators can spot suspiciously low payroll expenses or hidden workers, which are indicators of forced labor exploitation.

Offers official details on company registration, beneficial owners, and changes in shareholding or directorship. This data helps trace front companies or shell entities used to conceal forced labor proceeds and identify ultimate beneficiaries profiting from exploitation.

Require heightened scrutiny for clients operating in high-risk sectors or exhibiting red flags of forced labor, such as opaque wage structures or questionable workforce documentation. Verify the legitimacy of payroll practices, authenticate employee identities, and inspect beneficial ownership to detect any front companies funneling coerced labor proceeds.

Implement specialized automated monitoring scenarios to detect forced-labor-related payroll anomalies. These may include abrupt, large wage outflows from newly formed or dormant businesses, excessive or unexplained wage deductions, and multiple employees' wages funneled into a single account. This approach helps expose coerced labor flows concealed in otherwise routine payroll transactions.

Provide focused training for frontline and compliance teams to recognize forced labor red flags, such as excessive wage deductions or suspicious third-party control of employee accounts. Equip staff with clear escalation protocols for suspected coerced labor scenarios, ensuring a rapid response to exploitation-driven money laundering.

Segment and label customers by industry, location, and payroll practices to isolate higher-risk profiles for potential forced labor. Increase monitoring sensitivity where forced labor indicators—such as unexplained spikes in employee counts or abnormal wage expenses—surface, ensuring timely detection of coerced labor transactions.

Use public data (e.g., labor rights reports, business registries) to validate an employer’s workforce representation, wage levels, and labor-law compliance. Investigate media mentions or adverse findings that point to forced labor, ensuring any hidden coerced labor operations are uncovered despite deceptive or incomplete customer disclosures.

Continuously review payroll transactions of higher-risk clients to identify indicators of forced labor, such as large, repeated wage deductions marked as fees or multiple wages being rerouted back to the employer’s account. Regularly reassess industry and employee counts to detect forced labor exploitation concealed within legitimate payroll flows.

• Criminals deposit withheld or underpaid wages from forced labor into business bank accounts, falsely labeling them as legitimate payroll or operating income.
• Multiple accounts are often opened under different names or entities, enabling layering that conceals the origin of funds.
• Because banks typically rely on self-reported business activity, these illicit proceeds can blend with genuine transfers, complicating detection by financial institutions.

• Bearer shares conceal the owners of shell or front companies by eliminating formal registration of shareholding, enabling the anonymous transfer of control.
• Profits from forced labor are funneled through these entities, which are registered under nominal owners, disguising the true individuals behind withheld wages.
• This anonymity hampers law enforcement’s ability to identify and link the criminal beneficiaries to the proceeds of forced labor.

• Criminals can falsely record withheld or underpaid wages as legitimate payroll disbursements, making it appear that employees are being paid in full.
• By commingling illicit proceeds with genuine employee wage payments, perpetrators disguise the origin of funds, reducing suspicion and complicating audits.

• Offenders channel forced labor profits through business accounts registered under legitimate business names, disguising the illegal source of the funds.
• Multiple business accounts may be used to layer transactions, dissipating red flags and making it harder to trace withheld wages back to forced labor operations.

• Facilitates the formation of shell or front entities that appear legitimate yet conceal criminal control and ownership.
• Allows forced labor profits to be recorded as operating income or false payroll within corporate structures, complicating efforts to trace funds back to illegal labor practices.

Human traffickers facilitate forced labor by:

• Coercing or deceiving individuals to work for minimal or no wages.
• Diverting these unpaid or underpaid wages into the financial system as purportedly legitimate income.
• Exploiting payroll channels or layered accounts to obscure the illicit origin of profits, making it difficult for financial institutions to detect suspicious flows.

Shell or front companies are used to launder forced labor proceeds by:

• Falsely recording withheld wages as legitimate payroll or operating income.
• Providing minimal or no genuine operations, thereby concealing the true source of funds.
• Presenting a façade of legitimacy that complicates financial institutions' detection of illicit labor-related earnings.