When we hear the term “modern slavery” – perhaps better known as human trafficking – it is hard to wrap our brains around the notion that it still exists. Cocooned by the relative comforts of a Western lifestyle, a warm bed and abundant grocery shelves, the concept that hundreds of thousands of people in the U.S. and around the world are forced into gruesome and violent subjugation scenarios in the year 2022 seems almost unfathomable.
Until it is not. The disassociation, out of sight out of mind, is something we can no longer ignore.
Human trafficking is the act of, “recruiting, transporting, transferring, harboring, or receiving of persons by means of threat, fraud or use of force or other forms of coercion for exploitation.” It is one of the fastest growing crimes on the planet with more than 40 million victims currently enslaved. Around a quarter of those victims are tangled in positions of forced labor while roughly three-quarters of all victims are women or girls held against their will.
It is not an easy institution to dismantle with many high-powered people, networks, and governments involved in taking a piece of the $150 billion per year industry. As a result, sufferers often lurk quietly in the grim shadows afraid to come forward and pursue assistance or escape paths.
Financial institutions have long played a critical role in illuminating and disclosing the ever-growing problem to law enforcement. Now, with the advent of blockchain technology, more can now be done to bolster law enforcement and curb this terrible tragedy.
It’s important to note that governments and analysts often underscore that the incognito nature of cryptocurrency – which is powered by blockchain technology – offers a slick means for traffickers to conduct business below the radar. For example, an early 2022 Government Accountability Office (GAO) report claimed that, “drug and human traffickers are increasingly using online marketplaces and virtual currencies to connect with buyers and obscure the source of payments, according to agency documentation and interviews with agency officials.”
The report also pointed to the transparent nature of the blockchain as a tool, “to investigate suspected illicit activity that uses virtual currencies,” and noting that, “many virtual currency transactions are permanently recorded on public blockchains, allowing them to be matched to user information collected by virtual currency platforms that comply with anti-money laundering requirements.”
However, the U.S. government surmised that these mechanisms “can be of limited effectiveness” and “may be hindered by criminals’ use of privacy technology, and by some market participants’ non-compliance with anti-money laundering requirements.”
Since law enforcement and government agencies are generally behind the curve when it comes to blockchain implementation, crypto-specific groups – with physical assets and capabilities to not only follow the money train but also act upon it – could be enormously helpful in dismantling and disrupting human trafficking activities.
Many crypto exchanges already gather important information from transactions and have shown dedication in joining the urgent fight against human trafficking. Despite the perception that crypto is completely anonymous, that isn’t quite the case. Rather, it is a decentralized, encrypted currency that operates independently of federal reserves and governmental manipulation. Generally, originating destination addresses – as well as the financial figure of a transaction – are permanently recorded on the transparent blockchain and cannot be altered nor deleted. Traffickers and other criminals may be able to attempt to cloud their activities, but the records will remain immovable on the public ledger. Using savvy analytics and artificial intelligence, these databases can diagnose concerning behavioral paradigms and flag certain digital wallets and connections for further scrutiny.
Many world governments, perhaps most flagrantly the United States, lack the experience and implementation of blockchain technology in probing trafficking and exploitation cases. This makes the blockchain system a revolutionary apparatus for public/private partnerships and authentication which has already led to small, but significant, breakthroughs.
As a 2021 Foreign Policy (FP) article details, a barebones team of Internal Revenue Service (IRS) and Homeland Security investigators joined forces with the Korean National Police between 2018 and 2020 to comb through thousands of Bitcoin addresses – eventually leading to the arrest of 340 men spanning 38 countries, including the U.S., involved in funding a child exploitation website. Further, at least 25 minors were rescued from various abuse situations featured on the site. However, the lead investigator told the publication that other federal agencies disregarded the illicit site as they didn’t have the “expertise” to probe the predicament effectively.
Sadly, the demand for child sexual abuse material (CSAM) – routinely linked to child trafficking and slavery – is everywhere and often stems from affluent western nations. As FP points out, one study from the Philippines, “found that three-quarters of people who purchased materials depicting child sexual abuse were from the U.S., Sweden, and Australia. Meanwhile, 81 percent of child sexual abuse materials are produced in low-income regions, including Southeast Asia, Africa, and Latin America, according to the Global Partnership to End Violence Against Children.”
These countries often lack the ability, budgets, or willingness to effectively evaluate the digital ledger, shedding light on the importance of governments teaming up with independent entities with the skills and resources to identify and act upon dubious activity.
So how else can this cutting-edge blockchain technology be used?
Blockchain also has a crucial role to play in terms of supporting the victim. Since victims are often lured into sex trafficking rackets under the pretense that they will be given jobs, residency cards, wealth, housing, and are terrified of what could happen if they leave, blockchain can secure identity protection to help rebuild and reclaim their lives.
Blockchain can thus assist in generating a secure virtual identity that cannot be hacked or forged with one’s personal safety in mind. Establishing a personal digital identity for undocumented children and minors is also key, as these children are easy prey for predators who too often issue them fraudulent identification papers to move them across state and international borders.
Further, blockchain can bypass conventional communication modes to aid potential or existing victims seeking help, using artificial intelligence mechanisms to recognize trends in which a social worker or appropriate party can initiate communication and aide in investigations.
Then there are NFTs – cryptographic assets on a blockchain with unique identification codes and metadata – which some firms already use to raise money and awareness of the human trafficking issue.
Blockchain’s role in combating modern slavery is new and evolving, and much work still remains to harness its true power and potential.
So long as human trafficking exists and perpetrators use funds, whether, through traditional financial institutions, cryptocurrencies or plain old cash, blockchain-chartered analysts need to expand their scope to pinpoint the criminals. In addition, crypto exchanges and empowered entities must develop solid policies and procedures with streamlined detection protocols, including tailored algorithms, databases, and appropriate reporting procedures to effectively take down the dirty industry.
Experts caution that, at the very least, companies can alert any deception efforts such as “peeling chains” defined by chain analysis as, “a transaction pattern commonly seen in blockchain analysis, in which funds appear to move through several intermediate addresses.” Even though peel chains occur organically and aren’t evidence of money laundering, they may warrant further examination.
Exchanges can also look for wallet addresses that regularly vend on darknet markets often associated with child exploitation.
Globally and in the United States of America, modern slavery is an urgent issue. Every year, 300,000 children, as well as countless men and women, are at risk. While technology has undeniably played a part in perpetuating such unlawful activity, it can play an even bigger part in decimating its flow and bringing the trade to its knees.
