How IT can help fight human trafficking
IT managers at financial institutions must partner with their regulatory compliance officers to help end human trafficking, says a Canadian who has just been honored for his work to end such human abuse.
“My advice would be to [CISOs, CIOs, CTOs] to work closely with their compliance officers and compliance departments,” Peter Warrack, chief compliance officer of Toronto-based cryptocurrency exchange Bitfinex, who was awarded the Governor’s Meritorious Service Cross last month. general, said Tuesday in an interview.
The award is given for his work in helping to establish Project Protect in 2016, a partnership between banks, credit unions, money services and government agencies, which focuses on money laundering used by traffickers. Human being. After two years, participants had submitted 4,200 reports to the federal anti-money laundering financial transaction tracking agency FINTRAC.
At the time Project Protect was founded, Warrack was Director of Anti-Money Laundering Consulting for the Bank of Montreal.
“CTOs can provide the data needed to drive algorithms that compliance officers can use to detect the transactions of human traffickers moving through their environment,” he explained. “In many cases, in banks for example, we still have these pillars of compliance, technology, corporate security, etc., and very often those pillars don’t communicate very effectively. So for a CTO or CIO to go to [compliance] and say, ‘How can we help fight trafficking?’, that’s huge. The technological side can do a lot to prevent and detect it.
He disagreed with the idea that cryptocurrency facilitates a lot of crime, saying most criminal activity is still paid for in cash. The legitimate cryptocurrency community, including Bitfinex, is doing a lot to help combat the criminal use of crypto by working with law enforcement and regulators around the world.
Bitfinex is part of the Anti-human Trafficking Intelligence Initiative (ATII), he noted, which works with law enforcement around the world to raise awareness and notify police or regulators of possibly trafficking-related activities. human beings and the sale of child sexual abuse material sold on the Internet.
“What we’re already doing is making a huge difference,” Warrack said.
Coincidentally, shortly before the interview, the US Department of Justice announced that a husband and wife had been arrested in New York for allegedly conspiring to launder cryptocurrencies stolen in 2016 from Bitfinex. At the time, the coin was worth around $17 million. Today it is worth around $4.5 million. The police recovered most of it.
These arrests show “that crypto actually offers the ability to solve these crimes because it is traceable to some degree,” Warrack said. “There are ways to trace these things. The big ransomware attacks in the United States last year [an apparent reference to Colonial Pipeline] the FBI cracked the case. Last year, one of the biggest takedowns of internet child exploitation was identified through the use of cryptocurrency as a payment mechanism. So we do a lot.
“More and more regulations are being put in place by governments around the world, which are designed to provide more information to enable us to prevent crime in the first place, and where crime is occurring so law enforcement order detect it and bring people to justice.
After serving with the British Army Intelligence Unit in Northern Ireland, Warrack joined the Royal Ulster Constabulary in 1983, where he eventually worked in the Economic Crime Bureau. In 2002, after speaking at a conference in the United States, he came to Canada after being invited by RBC bank to start and lead its intelligence division for the prevention of financial crime and money laundering. silver. In 2010, he was hired by the Bank of Montreal to lead its anti-money laundering efforts, and in 2018 he left to start his own business to follow his interest in cryptocurrency, which led him to his position at Bitfinex.
It was a presentation by a victim of human trafficking at a 2015 anti-money laundering conference in Toronto that implicated Warrack in the problem. “I didn’t know anything about human trafficking at that time,” he recalls. But when the speaker asked the audience for help, he stepped forward.
This led to Project Protect, in which banks and other regulated entities work with the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) to identify and report suspicious information pointing to human trafficking.
It also led to the formation of related public-private groups: Project Shadow, to combat online child exploitation; Project Chameleon, to fight against love fraud; Project Guardian, to fight fentanyl trafficking; and Project Athena, to identify clandestine banking transactions that pass through casinos.
When asked if Canada’s governments and financial institutions are doing enough to stop money laundering, Warrack replied that “in most cases we have a very robust system. I’m a big fan of FINTRAC, which is Canada’s anti-money laundering regulator. They have strong mechanisms and regulations in place for banks and others to follow.
On the other hand, he added, “Canada is criticized as a country because, unlike most other countries in the world, the legal profession is not required to report suspicious transactions to the regulatory body. Everyone else — banks, etc. — must report their suspicious transactions to FINTRAC…”
Canada is one of the few countries where all international wire transactions above a certain level are automatically reported to FINTRAC,” he added. “So I think Canada has a strong system, but there are weaknesses.”
As for the Canadian honour, Warrack said he is just the guardian of the award for the thousands of other people around the world who work to detect and report human trafficking.