Crypto Aided in Child Exploitation, Human Trafficking: Report
The U.S. Department of the Treasury released a report detailing an increase in the use of cryptocurrencies to facilitate human trafficking and child sexual exploitation from 2020 to 2021.
The Financial Crimes Enforcement Network (FinCEN) analysis found over $412 million worth of suspicious activity across more than 2,311 government filings related to such crimes.
- Crypto payments for suspicious activity increased from 336 reported cases in 2020 to 1,975 in 2021.
- The majority of cases involved the purchase or sale of child sexual abuse material.
According to the FinCEN report, common transactions include customers buying child sexual abuse material (CSAM) on hidden dark web marketplaces.
These transactions also include exchanging crypto proceeds from CSAM sales into fiat currency through peer-to-peer payments or Bitcoin ATMs.
Read more: Robinhood Beats Expectations With Higher Crypto Revenue
The agency highlighted that perpetrators often force victims into slave labor or the commercial sex trade against their will
“Human traffickers and perpetrators of related crimes despicably exploit adults and children for financial gain,” said FinCEN Director Andrea Gacki. She commended financial institutions for reporting suspicious activity, which ultimately helps law enforcement protect and save innocent lives.
Report states that crypto allows criminals to hide illicit transactions
Crypto assets allow criminals to more easily hide illicit transaction paths. Additionally, FinCEN identified Bitcoin as the predominant currency used. BTC has been involved in over 90% of the reported cases.
After prior FinCEN warnings about the use of virtual currency in child exploitation and human trafficking, financial firms may have exercised increased diligence. This may have contributed to the sharp increase in crypto-related cases.
The report emphasizes the growing threat that cryptocurrencies pose by making it easier for predator networks and trafficking rings to conceal their activities.
Read more: Blockchain Association Warns Against Stifling Crypto Legislation
However, the time period examined was over three years ago, ending in December 2021. The cryptocurrency landscape has since undergone massive upheaval amidst the crypto winter in 2022 and the recent market recovery.
According to analysis by Chainalysis, the scale of crypto-powered child sexual abuse material networks actually peaked in 2021. In addition, this suggests certain alternative cryptocurrencies and transaction techniques may have become more prominent for such purposes in the interim.
FinCEN emphasizes the critical role financial institutions play in detecting and reporting suspicious activity to safeguard vulnerable populations. The agency recommends immediate law enforcement notification if human trafficking or child exploitation is suspected.
