FinCEN Analysis on CVC for Online Child Sexual Exploitation and Human Trafficking

On February 13, 2024, FinCEN released a Financial Trend Analysis on the Use of Convertible Virtual Currency for Suspected Online Child Sexual Exploitation and Human Trafficking (Analysis). It looks at threat patterns and trend information from January 2020 to December 2021. The Analysis outlines some pretty heinous crimes and illicit activity which isn’t necessarily new but it also provides some encouraging news that the number of Suspicious Activity Reports (SARs) related to this type of activity has increased tremendously.

If you’ve attended our webinars on Crypto / Virtual Currency and/ or Trafficking, it’s no surprise that there is high correlation between the illicit use of virtual currency and online child sexual exploitation (OCSE) and human trafficking. The Analysis confirms, based on the SAR data, that Bitcoin was the predominant convertible virtual currency (CVC) associated with such criminal activity. Specifically, FinCEN identified over 1,800 unique bitcoin wallet addresses related to suspected OCSE and human trafficking offenses.

The Analysis identifies four major typologies associated with CVC, OCSE, and human trafficking. These include the use of darknet marketplaces, peer-to-peer exchanges, CVC mixers and CVC kiosks. All of these topics are covered in our crash course Crypto / Virtual Currency webinar. If you are unfamiliar with the terminology, need help understanding the red flags you should be looking for, or would like a resource to help train your team, these webinars are available now OnDemand.

Financial institutions are in a unique position to help combat this type of illicit activity and according to this Analysis it appears that more and more institutions are detecting this type of activity and filing necessary information with FinCEN to ultimately help law enforcement.

Consulting Resources!

Published
2024/02/20

Amy Kudlacek

Amy brings many years of banking and compliance experience to Banker’s Compliance Consulting. She has worked for both large and small financial institutions and spent time working in every area of a bank. She started out as a teller in college and eventually became a branch manager. Her love, however, was always compliance. Amy began her career with Banker’s Compliance Consulting in 2000. Her knowledge and experiences have allowed her to develop a well-rounded and practical approach to regulatory compliance. Amy is CRCM certified, has a Bachelors Degree in Business Administration and is a graduate of the ABA Compliance School. Amy & her husband have two children at home and stay busy following their activities. They spend a lot of time in the bleachers!

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