Sexual Exploitation

Sexual exploitation generates illicit proceeds that qualify as a predicate offense for money laundering.

Sexual exploitation networks frequently rely on anonymized payments, funnel accounts, and P2P platforms to collect and move illicit proceeds. By exploiting gaps in oversight and minimal compliance requirements in these delivery channels (e.g., cryptocurrency ATMs, online payment portals, cash-based deposits), traffickers can layer and integrate funds without triggering standard transactional alerts. This is the central vulnerability enabling large-scale laundering of proceeds derived from forced or coerced prostitution and related offenses.

Human trafficking and sexual exploitation operations often extend across multiple countries or high-risk corridors. Criminals take advantage of cross-border payments, weaker AML regimes, and secrecy jurisdictions to conceal illicit funds. They move proceeds through remittance services, wire transfers, or crypto exchanges in regions with minimal documentation requirements. This cross-border strategy complicates enforcement efforts and allows traffickers to maintain anonymity.

• Aggregates negative news, legal actions, and misconduct allegations linked to individuals or entities.
• Helps uncover involvement in or past charges related to sex trafficking or sexual exploitation, informing enhanced due diligence.

• Gathers publicly available information from websites, social media, and other open data sources.
• Assists in detecting online advertisements or solicitations of sexual services, linking them to illicit financial flows.

• Provides detailed records of all money flows, including credits, debits, timestamps, and parties involved.
• Enables investigators to identify structuring, funnel account usage, or other suspicious patterns tied to the proceeds of forced prostitution or sexual exploitation.

• Consolidates transaction details, user identifiers, balances, and platform usage metrics.
• Helps detect unusual payment flows, anonymous transfers, and unregistered e-wallet activities possibly linked to sexual exploitation proceeds.

• Captures cryptocurrency transaction logs, wallet addresses, account details, and user activities on digital asset platforms.
• Enables tracing of crypto flows used to launder proceeds from sexual exploitation, identifying high-risk wallets and layering tactics.

• Contains verified customer information, including personal and business details, beneficial ownership, and transaction summaries.
• Supports detection of hidden controllers and suspicious relationships within networks perpetrating sexual exploitation, facilitating effective AML investigations and risk assessments.

• Provides ATM usage details, including location, timestamps, transaction types, and amounts.
• Enables detection of unusual withdrawal or deposit patterns possibly tied to on-the-ground prostitution activities and the funneling of cash proceeds.

• Contains metadata (sender, receiver, timestamps) of messages and calls; where permissible, may include content.
• Helps uncover coordination of sexual services, negotiation of payments, and distribution of illicit proceeds among traffickers or exploiters.

Assign higher risk ratings to jurisdictions known for sex trafficking or forced prostitution, triggering additional scrutiny for cross-border flows to or from these locations. This ensures that financial institutions identify potentially illicit funds connected to sexual exploitation networks and apply more rigorous checks before processing transactions.

Apply in-depth verification when customers or accounts exhibit indicators of involvement in sexual services (e.g., escort or adult entertainment businesses) to ensure legitimate licensing and lawful operations. This includes verifying ownership structures, corroborating revenue sources against stated activities, and checking for adverse media or law enforcement data on forced prostitution or child exploitation.

During onboarding and periodic reviews, validate customers claiming adult entertainment income or other sex-industry revenues by requiring business permits or relevant documentation, verifying the nature of services offered, and confirming registered addresses. Compare declared income sources with transaction volumes to identify mismatches that may indicate possible forced prostitution or child sexual exploitation proceeds.

Implement specialized detection rules to flag patterns such as frequent small deposits referencing massage or escort services, large incoming payments from adult content subscription platforms not aligned with a customer’s declared occupation, and high-volume inter-account transfers suggesting funnel activity. Investigate these alerts to uncover hidden sexual exploitation proceeds and disrupt illicit fund flows.

Use blockchain analytics to trace abnormal cryptocurrency deposits or withdrawals tied to adult webcam or content hosting platforms. Identify suspicious address clusters with sudden spikes in micropayments, potentially indicating revenue from forced pornography or sexual exploitation, and escalate for immediate investigation or account restrictions.

Provide specialized sessions to help staff identify red flags associated with sexual exploitation, such as multiple victims' deposits funneled into one account, suspicious referencing of minors, or third-party controllers underwriting account usage. Emphasize timely escalation protocols to ensure swift intervention if forced prostitution or child exploitation is suspected.

Classify customers engaged in escort services, adult content platforms, or associated industries as higher risk and tailor monitoring thresholds accordingly. This ensures quick detection of suspicious inflows, such as multiple small deposits referencing sexual services, or outflows, such as frequent cross-border transfers to known trafficking hubs, enhancing early identification of exploitation-related transactions.

Integrate adverse media checks, social media scans, and law enforcement bulletins into onboarding and ongoing reviews for entities related to adult services. Confirm legitimacy by cross-referencing public records on business licensing, past convictions, or negative news items indicating forced prostitution or exploitation of minors.

Engage in public-private partnerships to exchange intelligence on known sex traffickers, funnel accounts, and patterns linked to forced prostitution. Coordinate with law enforcement and other financial institutions to unite relevant data points, enabling faster identification and disruption of cross-institution sex trafficking networks.

Suspend or limit accounts when credible indicators of forced prostitution or child sexual exploitation arise. Block high-risk transfers and freeze assets linked to victims' exploitation. Require verifiable proof that the customer's activities do not violate laws before restoring full service.

• Criminals operating sexual exploitation rings deposit illicit funds into personal, business, or funnel bank accounts, sometimes distributing the deposits below thresholds to evade AML scrutiny.
• By using vague transaction references (e.g., 'entertainment' or 'events'), traffickers mask the true nature of income and commingle legitimate with illicit funds.
• The ease of opening accounts in multiple names or jurisdictions facilitates layering and complicates law enforcement efforts.

• Traffickers convert cash or funnel-account deposits into cryptocurrencies, exploiting pseudo-anonymity and rapid cross-border transfers.
• By moving funds through multiple wallets and exchanges—often in different jurisdictions—they obscure payment trails.
• Online subscription platforms or P2P crypto networks further facilitate layering, reducing the likelihood of detection.

• Criminals involved in forced prostitution or child exploitation use privacy-centric cryptocurrencies (e.g., Monero) to enhance anonymity.
• Built-in mechanisms like ring signatures or stealth addresses obfuscate transaction details, making it difficult for authorities to trace the flow of illicit funds.
• This heightened secrecy aligns with the technique’s emphasis on anonymized payment channels.

• Traffickers controlling forced or coerced prostitution often receive direct cash payments from customers. They deposit funds in small increments or across multiple accounts to avoid reporting thresholds.
• The physical and anonymous nature of cash reduces traceability, making it easier to commingle illicit proceeds with seemingly legitimate transactions.
• This high-liquidity asset enables traffickers to rapidly place and layer illicit income without leaving a clear transactional record.

• Traffickers frequently purchase and reload prepaid debit cards with proceeds from forced prostitution.
• Funds are transferred or spent in fragmented patterns, making it difficult for institutions to detect large-scale laundering.
• Indicator #5999 highlights multiple purchases or reloads of these cards used to pay or receive funds from adult entertainment providers, directly aligning with this technique.

• These services allow traffickers to purchase and sell cryptocurrencies directly among users, often circumventing centralized exchange compliance.
• Shell profiles or collusive traders help veil the illicit origin of funds tied to forced prostitution or child exploitation.

• Predominantly cash-based sex work generates significant ready cash, deposited incrementally at different locations to avoid triggering AML alerts.
• The reliance on cash facilitates anonymity for both payers and beneficiaries, weakening the audit trail.

• Criminals receive or move illicit payments directly between individuals, bypassing traditional banking oversight.
• Limited KYC on some P2P platforms facilitates anonymity, making it more difficult to identify the exploitation proceeds.

• Criminals exchange cash proceeds for cryptocurrencies or vice versa, exploiting the cross-border reach and pseudo-anonymity of digital assets.
• Rapid deposits and withdrawals across multiple wallets in various jurisdictions obscure the origin and beneficiaries of illicit funds.

• Traffickers feed physical cash from forced prostitution into crypto ATMs, acquiring digital assets without undergoing typical bank deposit scrutiny.
• Once converted, these funds can be rapidly transferred across multiple wallets, further concealing the illicit source of proceeds.

• Perpetrators create shell or front businesses purporting to offer legitimate adult entertainment or hospitality services.
• Illicit proceeds from forced prostitution or child sexual exploitation are deposited into these accounts and commingled with legitimate revenues, masking the criminal source.

• Smaller, frequent transfers are sent via remittance providers to co-conspirators or family abroad, disguising the scope of illicit cash flows.
• In less monitored corridors, criminals exploit minimal documentation requirements to launder sexual exploitation revenue.

• Traffickers deposit frequent small sums referencing adult services or coded terms, each kept below reporting thresholds to evade suspicion.
• Funds appear as ordinary personal income, complicating efforts to trace them back to the underlying sexual exploitation activities.

• Traffickers employ wire transfers, sometimes layering funds through intermediary banks and fictitious recipients, to move large sums across borders.
• These transactions obscure payment trails, impeding investigations into the underlying sexual exploitation.

• Forced or coerced adult content subscriptions and escort services can be billed through mainstream online payment portals, disguised as standard service fees.
• Layering and splitting transactions across multiple accounts confounds AML monitoring, concealing the true nature of these funds.

These criminals orchestrate or facilitate forced prostitution, child sexual exploitation, or other forms of sexual exploitation. They generate illicit proceeds that require laundering to obscure their origin. They may operate domestically or across borders, linking sexual exploitation with human trafficking networks, and exploit funnel accounts, anonymized payments, or structured transactions to evade detection by financial institutions. Their methods of controlling victims, such as violence and debt bondage, lead to illicit revenue streams that can appear legitimate through layering and integration.

These groups systematically profit from forced prostitution, trafficking, and other forms of sexual exploitation. They frequently operate across jurisdictions, utilizing sophisticated laundering channels such as funnel accounts, structured transactions, and virtual currencies to conceal illicit proceeds. By orchestrating trafficking networks, they create complex financial flows that challenge financial institutions' ability to detect and disrupt related money laundering.