Child Exploitation

Activity that generates illicit proceeds qualifying as a predicate offense for money laundering.

This technique primarily exploits vulnerabilities related to misrepresented or hidden customer identities. Offenders use aliases, fraudulent identification documents, and the identities of minors to evade detection and conceal the true beneficiaries. They also establish shell or front entities and non-profits with opaque ownership structures to obscure who actually controls the illicit proceeds derived from child exploitation.

Offenders leverage multiple digital and online channels—such as social media, gaming platforms, e-commerce sites, and P2P payment systems—to facilitate child exploitation and launder proceeds. These channels often offer limited oversight or fragmented KYC controls, enabling rapid and sometimes pseudonymous transaction flows that hinder effective AML monitoring.

Criminals move proceeds across multiple countries with inconsistent AML and child protection standards, exploiting cross-border payment services to layer funds internationally and evade detection. This multi-jurisdictional approach shields the ultimate beneficiaries by taking advantage of weaker regulatory regimes and limited information sharing between authorities.

• Aggregates negative news stories, legal actions, indictments, and court documents referencing misconduct and criminal complaints.
• Enables investigators to identify individuals or entities previously implicated in child exploitation, providing critical leads for AML monitoring and rapid escalation.

• Publicly available information from social media platforms, websites, and online forums.
• Detects suspicious activities or communications referencing the grooming and exploitation of minors, enabling more targeted financial investigations.

• Provides comprehensive records of financial transactions across accounts and channels, covering timestamps, amounts, currencies, parties, and transaction methods.
• Enables investigators to trace and identify suspicious or unusual payment patterns potentially linked to illicit proceeds derived from child exploitation, such as repeated small deposits, irregular layering attempts, or funneling across multiple accounts.

• Contains detailed records from e-wallets and other digital payment services, including user identifiers, transaction timestamps, amounts, and operational metadata.
• Helps uncover potentially high-volume or atypical payments associated with the sale, distribution, or facilitation of exploitative content involving minors.

• Specialized systems authenticate official IDs, passports, or other credentials, detecting potential forgeries or tampering.
• They support the identification of minors misrepresented as adults and criminals using fraudulent documents to obscure their involvement in child exploitation.

• Contains logs of digital asset transactions, including wallet addresses, transaction timestamps, sender and receiver information, and amounts.
• Facilitates the detection of cryptocurrency flows used to receive or launder funds tied to child exploitation, enabling enhanced tracing of illicit proceeds across blockchain networks.

• Contains verified identification details, addresses, beneficial ownership information, and risk assessments.
• Allows financial institutions to identify potential links to known child exploitation networks or suspicious profiles, enhancing monitoring and scrutiny of relevant accounts.

• Captures metadata from electronic communications, such as emails, phone calls, and messaging app exchanges, potentially including sender/receiver details and timestamps.
• Identifies possible grooming, recruitment, or coordination activities linked to child exploitation, supporting targeted investigations when illicit financial indicators are present.

• Contains details of international financial transactions, including amounts, currencies, geographic routing, and participating financial institutions.
• Assists in uncovering cross-border layering and complex payment flows commonly used to conceal illicit proceeds from child exploitation.

Incorporate intelligence on jurisdictions known for child trafficking or exploitation into the country-risk methodology. Apply enhanced scrutiny to cross-border transactions from these regions, including a closer review of destination accounts claiming to provide housing, educational, or charitable services for minors. Adjust controls proportionally, allocating compliance resources to monitor accounts and payment flows linked to known child exploitation hotspots.

Apply thorough risk assessments when onboarding or reviewing customers and businesses that present indicators of involvement with minors, child-focused services, or unusual account ownership structures. Verify the authenticity of documents for minors, cross-check business models (e.g., child-related charities or online platforms claiming to cater to children), and scrutinize ultimate beneficiaries. Where signs of child exploitation emerge—such as repeated micro-payments from questionable sources—require senior management approval, request detailed source-of-funds evidence, and increase the frequency of ongoing monitoring.

During onboarding and periodic reviews, verify the legal status of any adult claiming to act on behalf of a minor. Corroborate the legitimacy of guardianship or charitable operations involving children, and check for inconsistent or fabricated identification documents. Confirm that funds ostensibly benefiting minors are channeled through transparent, verifiable structures, ensuring no hidden facilitators funnel revenues from child exploitation into legitimate financial products.

Implement targeted monitoring scenarios that flag frequent micro-payments from adult content or gaming platforms referencing minors, abrupt spikes in funds credited to minors’ accounts, and cross-border transfers from high-risk jurisdictions known for child exploitation. Escalate alerts for prompt investigation when suspicious memos or transaction references involve underage content, ensuring closer scrutiny of structuring or layering attempts linked to child exploitation proceeds.

Use specialized analytics to track wallets and blockchain transactions tied to platforms popular among minors. Focus on repeated small-value inflows or high-velocity transfers that could mask child exploitation proceeds. Identify wallet addresses flagged for underage content sales, monitor mixing/tumbling services often used to conceal these illicit funds, and promptly escalate anomalies for potential law enforcement engagement.

Deliver specialized training modules to equip frontline and compliance teams with the skills to identify genuine child exploitation red flags. These may include unusually high volumes of micro-payments for alleged child-focused services, references to underage sexual content, or suspicious ID documents for minors. Emphasize immediate escalation procedures and handling instructions, ensuring staff understand privacy and mandatory reporting obligations in cases involving children.

Cross-reference social media and gaming platform handles provided in payment memos, checking open-source intelligence for indicators of underage exploitation or known grooming networks. Leverage external databases and public records to verify whether purported children's charities or payment beneficiaries have legitimate operations and no historical ties to child exploitation. Investigate discrepancies or adverse information swiftly, updating risk profiles and alerting compliance teams of red flags.

Collaborate with law enforcement and industry peers by promptly sharing intelligence on patterns such as micro-payment structuring, suspicious references to minors, or fraudulent documents. Participate in trusted information-sharing forums to identify cross-financial institution child exploitation rings and ensure swift, coordinated disruption of these networks. Maintain clear legal frameworks and protocols to exchange relevant details without breaching privacy standards.

• Offenders accept payments or funnel illegal proceeds through in-game digital assets or online platform collectibles, taking advantage of the ease of transferring these items with minimal oversight.
• They can then convert virtual goods back into real currency or different digital assets, further complicating the traceability of funds derived from child exploitation.

• Traffickers open or control multiple bank accounts, sometimes using fraudulent identification documents or shell entities, to deposit and move illicit proceeds.
• By intermingling legitimate and criminal funds or making frequent small deposits, they layer illicit child exploitation revenue, impeding straightforward tracing efforts.

• Offenders convert proceeds into mainstream cryptocurrencies on regulated or unregulated exchanges, using fraudulent IDs or straw accounts.
• Funds are then shuffled among multiple wallets, making it challenging for authorities to distinguish legitimate from illicit flows tied to child exploitation.

• Some criminals specifically leverage privacy-focused cryptocurrencies to conceal the origin of their child exploitation proceeds.
• Obfuscating features like stealth addresses or ring signatures thwart traditional blockchain analytics and reduce transparency around transaction participants.

• Offenders orchestrating child exploitation often receive direct cash payments from clients or intermediaries, minimizing transaction records.
• Physical currency can then be smuggled or deposited in smaller increments (structuring), enabling perpetrators to evade detection and obscure the true source of funds.

• Child exploitation offenders exploit prepaid cards or digital wallets with minimal KYC, enabling rapid loading and withdrawal of funds.
• Repeated small transactions or reloads on multiple cards obscure payment trails, making it more difficult for financial institutions to detect suspicious activities linked to child exploitation.

• Facilitate user-to-user crypto trades under lax or variable KYC requirements, enabling anonymity for illicit actors.
• Avoid centralized record-keeping, making the origin and flow of child exploitation proceeds more difficult to track.

• Provide an online marketplace where exploitative content can be sold under the guise of adult or legitimate offerings.
• Facilitate micro-transactions that camouflage the illicit source of funds, making it difficult to discern legitimate from criminal proceeds.

• Enable small-amount, direct transfers from exploitative content buyers to offenders with minimal oversight.
• Support rapid, repeated micro-payments, hindering the ability of financial institutions to pinpoint patterns of child exploitation funding.

• Convert proceeds from child exploitation into cryptocurrencies, adding layers of pseudonymity.
• Split transactions across multiple accounts or wallets, complicating law enforcement's efforts to trace and freeze illicit funds.

• Open purported children’s charity accounts used for depositing and withdrawing exploitation profits.
• Exploit the perceived legitimacy of non-profits to avoid rigorous AML scrutiny and disguise illicit transactions as donations.

• Aggregate diverse payment channels, potentially mixing illicit child exploitation revenues with legitimate transactions.
• Enable rapid settlement of multiple small payments, reducing the likelihood of individual suspicious activity alerts.

• Transfer profits internationally through channels with inconsistent AML regimes, concealing actual beneficiaries.
• Employ layered transactions to obscure funds’ origin, rapidly shifting illicit proceeds among multiple jurisdictions.

• Form and administer shell or front entities, shielding traffickers’ identities behind complex legal structures.
• Manage corporate vehicles that can receive income from child exploitation, presenting them as legitimate business proceeds.

Human traffickers knowingly coerce or deceive minors into forced labor or sexual exploitation. They generate illicit proceeds by controlling victims, often collecting payments via cash or electronic transfers. These offenders manipulate financial channels to hide their role and the illicit origin of funds, creating challenges for financial institutions attempting to identify or monitor such transactions.

Offenders establish or misuse non-profit organizations by:

• Creating purported charities for children's services to channel irregular cash deposits or withdrawals linked to exploitation profits.
• Exploiting the perceived legitimacy of non-profits to avoid scrutiny and disguise the criminal origin of funds.

Criminals exploit gaming platforms by:

• Identifying and grooming minors through chat features and user communities.
• Using aliases or false profiles to hide their real identities and transactions, complicating detection by financial institutions monitoring related payments.

Offenders leverage cryptocurrency exchanges to:

• Convert or store proceeds derived from child exploitation in virtual assets.
• Layer funds across multiple crypto wallets or accounts, obscuring the source of illicit funds and complicating efforts to trace transactions.

Shell or front companies are formed or acquired by traffickers to:

• Conceal and integrate illicit revenue from child exploitation into the legitimate financial system.
• Obscure ownership and mask the true source of the funds, reducing transparency for financial institutions.