The payments, expenses and illegal revenues generated by these crimes are moved across borders by criminal networks in various ways, ranging from sophisticated to rudimentary methods.
A new UNODC study sheds lights on these ‘illicit financial flows’, focussing on the cross-border movement of money and other value transfers associated with smuggling of migrants and trafficking of people from several countries in Asia and the Middle East to Europe.
The study was conducted under the framework of GLO.ACT, a UNODC project funded by the European Union since 2015, which is currently being implemented in Afghanistan, Iraq and Pakistan, in partnership with the International Organization for Migration.
The research was carried out together with the Research and Trends Analysis Branch of UNODC.
“Our aim was to understand the trends, nuances, and complexities surrounding these flows, including how they are generated and the ways in which the money and other items of value are transferred and spent,” says Jee Aei Lee, UNODC Legal and Policy Officer.
“The main focus is on the illicit financial flows associated with smuggling and trafficking originating from GLO.ACT partner countries. With this information, governments can be better equipped to identify, respond to and trace such illicit financial flows,” says Lee.
The study shows that the highly organized criminal groups, as opposed to individuals and loosely connected criminal networks, make the highest financial gains from human trafficking and migrant smuggling.
“In the case of smuggling of migrants, there are many ways in which illicit financial flows arise, but the bulk of them result from payments to smugglers by migrants and refugees who use smuggling services,” says Dr. Claire Healy, the UNODC Research Officer who led the research for the study.
In a 2014 court case in Austria, for example, the defendants were accused of smuggling nearly 300 people into Austria over a five-month period.
Officials estimated that the organized criminal group involved generated the equivalent of over three million USD. However, it was reported that the eight men accused of smuggling received only a small portion of the profits.
The fees for smuggling vary according to the different routes and different types of smuggling services provided.
An Iraqi woman interviewed for the study stated that her family paid over 9,000 EUR for one family member to be smuggled from Türkiye to Denmark by sea and land.
Additional services provided by smugglers come at an extra cost. Some networks arrange accommodation, fraudulent work permits, passports and visas and sometimes add the amounts they need to pay in bribes to corrupt officials to the migrant’s fee.
“In the case of human trafficking, illicit financial flows arise in many ways, including from the costs involved with recruiting and controlling victims, as well as the revenue gained from exploiting the victims,” says Healy.
“The type of traffickers, the form of exploitation, and the profile of victims all determine the illicit financial flows involved.”
UNODC’s research has found that the revenue generated by human trafficking varies greatly.
For example, reported cases of sexual exploitation reveal that some trafficked girls and women were sold for as little as 36 USD, yet in other cases for as much as 23,600 USD.
In another case of trafficking in persons for the purpose of organ removal, a kidney was sold for 6,300 USD.
In the majority of cases, criminal networks use payment and transfer methods that are not easily traceable by authorities.
“High-level organizers of smuggling and trafficking may be based in the countries of origin, transit, or destination of their victims or clients, or they may be in other countries,” explains Dr Claire Healy.
“They can manage the illicit income, costs, and proceeds remotely, through wire or banking institution transfers, informal money transfer systems or delivery by cash courier.”
In the GLO.ACT partner countries, while direct cash payments and the use of money transfer service providers are common, so is the use of hawala – a money or value transfer system.
With hawala, money is transferred without any actual movement of cash but rather through transactions between hawala brokers, who operate on a system of trust.
While it is overwhelmingly used for legitimate purposes, some of its attributes make it vulnerable to use by organized crime groups, including smugglers and traffickers.
In some cases, illicit finances are registered as legal income of legitimate businesses and are processed and transferred together with legal funds.
The study found that the illicit income made by smugglers and traffickers is largely spent in one of three ways - sent back to the country of origin, used to support a lavish lifestyle, or laundered – through both criminal and legitimate businesses – in destination countries.
“Information and communications technology, including web-based platforms, are sometimes used by smugglers and traffickers, not only to commit crimes, but to manage the illicit proceeds too,” says UNODC’s Dr Claire Healy.
“For example, smugglers sell and send fraudulent travel documents to clients on the Internet and traffickers use online platforms to recruit and exploit victims.”
“To effectively disrupt, dismantle and prosecute migrant smuggling and trafficking networks, we need to better understand the nature of the illicit financial flows involved,” says UNODC’s Jee Aei Lee.
“Ultimately, these crimes are all about making money, so we need to get to the financial heart of the operations and reduce the criminals’ financial motivation.”
International partners, such as Eurojust who have contributed to the study, agree on this approach.Zacharias Symeou, Counsel of the Republic, Republic of Cyprus, National Member of Cyprus and Chair of Eurojust Anti-Trafficking Team’s subgroup on migrant smuggling says: “Eurojust’s mission in confronting illicit financial flows is threefold - to address the immediate human crisis, to reduce the financial incentives of this perilous trade, and to dismantle the nefarious organized crime groups that profit from the desperation of others.”
The Global Action against Trafficking in Persons and the Smuggling of Migrants – Asia and the Middle East (GLO.ACT Asia and the Middle East) is a joint initiative by the European Union and UNODC, being implemented in partnership with the International Organization for Migration.