[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
ENDING EXPLOITATION: HOW
THE FINANCIAL SYSTEM CAN WORK
TO DISMANTLE THE BUSINESS
OF HUMAN TRAFFICKING
=======================================================================
VIRTUAL HEARING
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY,
INTERNATIONAL DEVELOPMENT
AND MONETARY POLICY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
MARCH 25, 2021
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-14
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U.S. GOVERNMENT PUBLISHING OFFICE
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado ANN WAGNER, Missouri
JIM A. HIMES, Connecticut ANDY BARR, Kentucky
BILL FOSTER, Illinois ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio FRENCH HILL, Arkansas
JUAN VARGAS, California TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas BARRY LOUDERMILK, Georgia
AL LAWSON, Florida ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam WARREN DAVIDSON, Ohio
CINDY AXNE, Iowa TED BUDD, North Carolina
SEAN CASTEN, Illinois DAVID KUSTOFF, Tennessee
AYANNA PRESSLEY, Massachusetts TREY HOLLINGSWORTH, Indiana
RITCHIE TORRES, New York ANTHONY GONZALEZ, Ohio
STEPHEN F. LYNCH, Massachusetts JOHN ROSE, Tennessee
ALMA ADAMS, North Carolina BRYAN STEIL, Wisconsin
RASHIDA TLAIB, Michigan LANCE GOODEN, Texas
MADELEINE DEAN, Pennsylvania WILLIAM TIMMONS, South Carolina
ALEXANDRIA OCASIO-CORTEZ, New York VAN TAYLOR, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts
Charla Ouertatani, Staff Director
Subcommittee on National Security, International
Development and Monetary Policy
JIM A. HIMES, Connecticut, Chairman
JOSH GOTTHEIMER, New Jersey FRENCH HILL, Arkansas, Ranking
MICHAEL SAN NICOLAS, Guam Member
RITCHIE TORRES, New York LEE M. ZELDIN, New York
STEPHEN F. LYNCH, Massachusetts ROGER WILLIAMS, Texas
MADELEINE DEAN, Pennsylvania TOM EMMER, Minnesota
ALEXANDRIA OCASIO-CORTEZ, New York WARREN DAVIDSON, Ohio
JESUS ``CHUY'' GARCIA, Illinois ANTHONY GONZALEZ, Ohio
JAKE AUCHINCLOSS, Massachusetts VAN TAYLOR, Texas, Vice Ranking
Member
C O N T E N T S
----------
Page
Hearing held on:
March 25, 2021............................................... 1
Appendix:
March 25, 2021............................................... 33
WITNESSES
Thursday, March 25, 2021
C.deBaca, Ambassador Luis, Senior Fellow in Modern Slavery, and
Visiting Lecturer in Law, Yale University Law School, and
former U.S. Ambassador-at-Large to Monitor and Combat
Trafficking in Persons......................................... 5
Hatcher, Rev. Dr. Marian, USA Representative, Survivors of
Prostitution-Abuse Calling for Enlightenment (SPACE)
International.................................................. 10
Koch, Barry M., Founder and Owner, Barry M. Koch, PLLC, and
Commissioner, Liechtenstein Initiative......................... 8
Mickelwait, Laila, Founder, Traffickinghub Movement, and
President, Justice Defense Fund................................ 12
Shelley, Louise, Omer L. and Nancy M. Hirst Endowed Chair, George
Mason University, and Director, Terrorism, Transnational Crime
and Corruption Center (TraCCC)................................. 6
APPENDIX
Prepared statements:
C.deBaca, Ambassador Luis.................................... 34
Hatcher, Rev. Dr. Marian..................................... 43
Koch, Barry M................................................ 48
Mickelwait, Laila............................................ 53
Shelley, Louise.............................................. 119
Additional Material Submitted for the Record
Wagner, Hon. Ann:
Responses to questions for the record submitted to Rev. Dr.
Hatcher.................................................... 130
Responses to questions for the record submitted to Mr. Koch.. 132
Responses to questions for the record submitted to Ms.
Mickelwait................................................. 134
ENDING EXPLOITATION: HOW THE
FINANCIAL SYSTEM CAN WORK TO
DISMANTLE THE BUSINESS
OF HUMAN TRAFFICKING
----------
Thursday, March 25, 2021
U.S. House of Representatives,
Subcommittee on National Security,
International Development
and Monetary Policy,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 12:01 p.m.,
via Webex, Hon. Jim A. Himes [chairman of the subcommittee]
presiding.
Members present: Representatives Himes, Gottheimer, San
Nicolas, Torres, Lynch, Dean, Ocasio-Cortez, Garcia of
Illinois, Auchincloss; Hill, Zeldin, Williams of Texas, Emmer,
Davidson, Gonzalez of Ohio, and Taylor.
Ex officio present: Representative Waters.
Also present: Representative Wagner.
Chairman Himes. Good afternoon, everybody. Welcome. The
Subcommittee on National Security, International Development
and Monetary Policy will come to order.
Without objection, the Chair is authorized to declare a
recess of the subcommittee at any time. Also, without
objection, members of the full Financial Services Committee who
are not members of this subcommittee are authorized to
participate in today's hearing.
As a reminder, I ask all Members to keep themselves muted
when they are not being recognized by the Chair. This will
minimize disturbances while Members are asking questions of our
witnesses. The staff has been instructed not to mute Members
except when a Member is not being recognized by the Chair and
there is inadvertent background noise.
Members are also reminded that they may only participate in
one remote proceeding at a time. If you are participating
today, please keep your camera on. And if you choose to attend
a different remote proceeding, please turn your camera off.
If Members wish to be recognized during the hearing, please
identify yourself by name to facilitate recognition by the
Chair.
Just as a reminder--this is our third subcommittee
hearing--I will be pretty quick on the gavel when the timer has
expired. I will, of course, allow witnesses to finish, within
reason, answering questions. But I would ask Members that, if
they go through their 4 minutes, to conclude their remarks, and
any questions that are at that 4-minute mark will have to be
answered in writing for the record.
Today's hearing is entitled, ``Ending Exploitation: How the
Financial System Can Work to Dismantle the Business of Human
Trafficking.''
I now recognize myself for 4 minutes to give an opening
statement.
Trafficking, and especially human trafficking, is a
societal ill that too many people think is somebody else's
problem. Even in southwestern Connecticut, we see the brutal
effects of trafficking, and we are hardly unique in that
respect.
In 2019, in the United States, Polaris, which operates the
National Human Trafficking Hotline, worked on more than 11,500
situations of human trafficking involving more than 22,000
survivors, more than 4,000 traffickers, and almost 2,000
suspicious businesses. And the most shocking fact is that these
numbers are likely only a very small percentage of what is
actually going on.
The worldwide reach of human trafficking is stunning. There
are estimated to be more than 25 million human trafficking
victims worldwide, and the business of human trafficking
generates more than $150 billion in illegal profits per year.
Today's hearing focuses on how we can harness the power of
our financial services system to disrupt the business of human
trafficking, whether by improving the anti-money-laundering
statutes or by requiring public businesses to look down their
supply chain to ensure that they are not benefiting from forced
labor.
There are a number of areas of improvement that I think
this subcommittee should consider. We must ensure that the
financial services firms know what to look for to help identify
and shut down traffickers and that law enforcement has the best
tools and resources available.
We must increase our understanding of the nontraditional
means of finance that traffickers are using to avoid our
traditional anti-money-laundering detection systems. That
includes traditional payment alternatives like prepaid credit
cards, as well as newer technology like cryptocurrency.
We must also pay special attention to the survivors of
human trafficking. In the course of their exploitation, some
survivors have their identities stolen by their traffickers,
who then open accounts in their names to further their criminal
enterprise. As these survivors seek to rebuild, they can find
themselves in the untenable position of not being able to find
shelter or open bank accounts, leaving them at risk of being
victimized again.
Finally, I take special pleasure in recognizing the
extremely important role that nonprofits play in this space.
Grace Farms, which is located in my district, has done
tremendously important work to combat human trafficking by
partnering with law enforcement and other nonprofits. That
includes working with renowned experts, like Ambassador
C.deBaca, who is with us today, on issues like the use of
forced labor in the production of construction materials.
With that, I would like to thank our panel of witnesses,
whose expertise and experience in their respective fields is
unparalleled. I sincerely appreciate your assistance in
tackling these difficult issues.
The Chair now recognizes the distinguished ranking member
of the subcommittee, my friend, French Hill, for 5 minutes for
an opening statement.
Mr. Hill. Thank you, Mr. Chairman. Thank you for convening
this hearing, and I thank the witnesses for joining us today,
and for your expertise.
A year ago, we began this anti-trafficking initiative when
we held our first hearing. The plan then was to have hearings
every quarter or so to dive deeper into specific types of
trafficking. Then, COVID hit, and derailed our well-crafted
plan, but I am pleased that we are resuming our previously
scheduled programming today.
To that end, I have said I would like to get these hearings
to resume in person, Mr. Chairman. I know you share my view.
Given the country is reopening, I think it is imperative for
Congress to return to normal operations and serve as an example
for our nation.
Mr. Chairman, a year later, trafficking remains a huge
concern for our country. Since I have been in Congress, I have
traveled to the southwest border 6 times to study those
critical policy needs. President Biden's recent executive
actions that counter the Trump Administration's immigration
reforms and border measures have increased human trafficking
concerns.
The unaccompanied minors arriving at our southwest border,
if they are not already, are potential victims of human
trafficking. So far, our U.S. Customs and Border Protection
(CBP) has already apprehended 11,000 of these minors in
February. According to the CBP, the cartels are making $14
million a day. Let me repeat that: $14 million a day, or $400
million in February alone, in trafficking the most vulnerable
to our open border.
Statistics tell us that 75 percent of these kids are
between the ages of 15 and 17 and are highly vulnerable to
smugglers and sexual assault. Many end up in debt bondage,
working off their illegal crossing fee by forced labor, sex, or
both.
The Biden Administration inherited a secure border, and
since eliminating many of the Trump Administration decisions,
the U.S. has seen a 168 percent increase in border crossings
and apprehensions for unaccompanied minors, and 63 percent for
families.
Likewise, in Africa's largest country, Nigeria, my concern
is growing about the deteriorating human rights situation. I
recently had a call with Dr. Khataza Gondwe with the Christian
Solidarity Worldwide organization to discuss the intersection
of trafficking and terrorism in Africa.
And sadly, as we know, human trafficking happens anywhere,
all over our nation, in our backyards. In my home State this
past January, 13 people were arrested for a sex trafficking
operation in northeast Arkansas. In this local case,
fortunately, due to coordinated and cooperative law
enforcement, and, I must say, well-funded law enforcement at
the local, State, and Federal level, three victims were
rescued.
We need to ensure that we have policies in place to
facilitate that kind of synergy and coordinated effort to cross
jurisdictions and agencies. This is exactly what my good
friend, Ann Wagner, has advocated for during her time in
Congress, including in her bill, the Homeland Security
Investigations Victim Assistance Act, which would help victims
of trafficking access the resources they need, while also
assisting law enforcement in apprehending their traffickers. I
am pleased that she is waived into this hearing today and will
lend her knowledge, interest, and expertise.
Homeland Security Investigator Special Agent Jere Miles
said it best in that recent Arkansas raid: ``When we
collaborate with local law enforcement and community partners,
we increase our reach and our impact.'' I could not agree more
with this sentiment.
I look forward to the expertise shared today, and I yield
back the balance of my time.
Chairman Himes. Thank you, Mr. Hill. I do share your hope
that we can do this in person. I actually did a little due
diligence in talking to the attending physician, and I was told
that our Member vaccination rate is hovering around 75 percent.
It probably doesn't quite get us there, so I would urge all
members of the subcommittee who share mine and the ranking
member's hopes that we can get together in person to urge our
colleagues to get vaccinated so that we can leave this
technology behind.
Moving on, today, we welcome the testimony of our
distinguished witnesses. By way of very quick introduction,
first, Ambassador Luis C.deBaca, Senior Fellow in Modern
Slavery, and Visiting Lecturer in Law at Yale University Law
School here in the State of Connecticut. He is the former
Ambassador-at-Large to Monitor and Combat Trafficking in
Persons.
Second, Dr. Louise Shelley, the Omer L. and Nancy M. Hirst
Endowed Chair at George Mason University, and the Director of
the Terrorism, Transnational Crime and Corruption Center, known
as TraCCC.
Third, Mr. Barry M. Koch, is the Founder and Owner of Barry
M. Koch, PLLC, and Commissioner of the Liechtenstein
Initiative.
Fourth, we have Rev. Dr. Marian Hatcher, the USA
Representative for SPACE International.
And finally, we have Ms. Laila Mickelwait, Founder of
Traffickinghub, and President and Founder of the Justice
Defense Fund.
Witnesses, thank you all for being here. You are reminded
that your oral testimony will be limited to 5 minutes. You
should be able to see a timer on your screen that will indicate
how much time you have left, and a chime will go off at the end
of your time. I would ask that you be mindful of the timer, and
quickly wrap up your testimony if you hear the chime, so that
we can be respectful of both the witnesses' and the committee
members' time. And without objection, your written statements
will be made a part of the record.
Ambassador C.deBaca, you are now recognized for 5 minutes
to give an oral presentation of your testimony.
STATEMENT OF AMBASSADOR LUIS C.deBACA, SENIOR FELLOW IN MODERN
SLAVERY, AND VISITING LECTURER IN LAW, YALE UNIVERSITY LAW
SCHOOL, AND FORMER U.S. AMBASSADOR-AT-LARGE TO MONITOR AND
COMBAT TRAFFICKING IN PERSONS
Ambassador C.deBaca. Thank you, Mr. Chairman, Ranking
Member Hill, and members of the committee.
Our Constitution, laws, and treaty obligations protect
people from forced labor, forced prostitution, and the
commercial sexual exploitation of children, but millions remain
in servitude with a financial impact of at least $150 billion.
That is a grave national security threat and a human rights
imperative. It is a victim services challenge, and it poses
both risks and opportunities for the financial system. Risks,
because traffickers and profiteers use the financial system to
move money, collect payments, and commit other crimes,
sometimes even terrorism. So, too, lack of access to the
financial system leads to self-collateralization. The resulting
recruitment fees, transportation costs, and deductions for food
and clothing create a peonage situation even before work
starts.
The abusive company-store employer-based financial system
of the past is alive and well, and financial fraud and identity
theft by traffickers further victimizes those upon whom they
prey, because the financial system in which this crime is
poorly understood exacerbates the victimization through credit
scoring and other means, just as the lack of understanding has
kept survivors out of transitional job opportunities because of
criminal records or the inability to meet licensing standards.
Initial discussions and preliminary responses have largely
been around the retail level and primarily focused on sex
trafficking, but the risk is much broader and touches on
aspects such as commercial banking and construction financing,
as I think my fellow witnesses will address. One note on
construction financing, that multi-trillion-dollar industry is
riddled with forced labor, and timber and mining operations
often drive demand for sex trafficking.
In October, Grace Farms' Design for Freedom report
identified a number of at-risk building materials in addition
to the abuse that we have seen on job sites. A good next step
in advancing that effort would be to address construction
financing so the trafficking risks are not borne solely by
builders, workers, and vulnerable communities.
Indeed, financial intelligence around construction
materials supply chains can bring opportunities for disruption,
innovation, and profit. Major financing often comes through the
international financial institutions of multilateral
development banks, but they have not taken an active role. The
U.S. International Development Finance Corporation's project
language prohibiting forced labor might be a good model for
their activities.
There are opportunities for partnership: the financial
sector can help restore survivors and support service
organizations; banks and consumer credit ratings should
aggressively develop credit repair tools; and firms can provide
hiring pathways for restoration and partner with service
providers and survivors to obtain financial intelligence.
But none of these things will be possible without
leadership from the United States Government, which is why
there is a need for agency-wide coordination at Treasury to
move beyond the admirable, but informal, engagement and
innovation of motivated staff. Imagine secretarial
prioritization and trafficking-specific authorities, work
responsibilities, and budgets, not to mention relationships
with organized labor, human rights groups, service providers,
and survivors themselves. So, too, clarifying and intensifying
human rights sanction authorities and activities would provide
a strong tool and ensure harmonization with our allies.
Last fall, interagency recommendations were crafted with
input from nongovernmental organizations (NGOs) and survivors.
They represented the kind of bipartisan consensus that
characterizes this fight, and they include: stepped-up
financial intelligence gathering and dissemination; expansion
and intensification of efforts at the Department of the
Treasury; harnessing the power of the international financial
institutions (IFIs) and the multilateral development banks
(MDBs); creating innovative partnerships in support of
survivors, as well to protect the integrity of the system;
facilitating credit repair and restoration; and recognizing the
need for mechanisms to protect NGOs and service providers who
share important financial information and intelligence.
A number of bills that track these recommendations have
been introduced or are in the discussion stage and would have a
real impact.
Another worthy prospect in discussion is to build upon the
success of the Foreign Corrupt Practices Act (FCPA) for
trafficking and human rights abuses.
Any of these recommended activities and potential laws
would add to our ability to investigate and prosecute, to
protect and restore, and to prevent this grave human rights
crime. Such efforts would facilitate partnerships within the
financial system, with allied nations, and most importantly,
the most vulnerable and affected communities. And they would
harness the power of the financial system and regulatory bodies
alike in service to that most American of ideals: the promise
of freedom.
Thank you.
[The prepared statement of Ambassador C.deBaca can be found
on page 34 of the appendix.]
Chairman Himes. Thank you, Ambassador.
Dr. Shelley, you are now recognized for 5 minutes to give
an oral presentation of your testimony.
STATEMENT OF LOUISE SHELLEY, OMER L. AND NANCY M. HIRST ENDOWED
CHAIR, GEORGE MASON UNIVERSITY, AND DIRECTOR, TERRORISM,
TRANSNATIONAL CRIME AND CORRUPTION CENTER (TRACCC)
Ms. Shelley. Thank you, and it is a great honor to be with
you today.
Human trafficking networks are entrepreneurial and
flexible, and, as my written testimony reveals, human
trafficking networks often converge with other illicit
activities. In the United States, we have a variety of
networks, both domestic and international, and their money is
laundered both in the U.S. and abroad.
We have networks that are very small, with a single
trafficker and case facilitators; or, as in a recent Federal
case that produced an indictment in 2018, involved 30,000
clients, 58 cities, and 350,000 online advertisements. This
reflects the growth of human trafficking in the online
environment, as Laila Mickelwait will discuss.
I also agree with Ambassador deBaca that much more needs to
be done with labor trafficking, and that often involves
corporate actors as we see in the fishing, agriculture, and
production sector.
Human traffickers in documented cases that I mention have
used every type of money laundering available: underground
banking; bulk cash smuggling; money laundering into real
estate; establishment of live businesses as vehicles for money
laundering, trade-based money laundering; misuse of credit
cards, including prepaid credit cards; money transfer
businesses; wire transfers; banks; and cryptocurrencies. And,
in many cases, this illicit activity of human trafficking
converges with the legitimate economy.
What policies do we need to address human trafficking?
First of all, we need to implement and realize the beneficial
ownership law that has just been passed, and it needs to be
carefully and comprehensively implemented. Traffickers can now
hide behind shell companies and anonymous ownership. The
largest detected network of human traffickers that I just
mentioned involved massage parlors in cities across the U.S.,
Canada, and Australia, and the vast majority of massage parlors
hide their owners' identity. Therefore, we need to implement
the Corporate Transparency Act and establish a national
beneficial ownership directory.
Second, we need to focus on cryptocurrency, which is being
used to finance human trafficking and many other forms of
illicit activity. Greater financial oversight is needed of this
fast-growing financial instrument, and similarly, cooperation
in the sharing of information between government agencies and
the private sector is needed to track and analyze criminal
transactions, as I indicate in my statement.
Third, we need to follow the money. There needs to be a
much more central attention to the role of money in
investigations of human trafficking. This is difficult because
there are relatively small numbers of suspicious activity
reports in the FinCEN database, and they are often not used to
full advantage, as was seen in the Epstein case. Training and
awareness must be raised in the banking community to not only
increase SARs reporting, but also to make use of these reported
suspicious transactions that are presently underutilized.
Fourth, we must focus on supply chains for human
trafficking by looking at transport systems, travel agencies,
hotels, rental apartments, rideshare services, and short-term
rental apartments. According to the Human Trafficking
Institute's analysis of Federal trafficking cases in recent
years, over 80 percent of Federal cases of sex trafficking
involved exploitation at hotels and motels.
Fifth, we need to enhance regulation and reporting
requirements of online businesses to vet customers and report
suspicious transactions. More needs to be done by companies,
such as Uber and Airbnb, in monitoring data for suspicious
patterns of financial transactions and how their businesses
inadvertently support human trafficking networks. The role of
online businesses in human trafficking is broader than these
companies addressed by the FOSTA-SESTA legislation.
And sixth, we need to address trade-based money laundering
(TBML). This underacknowledged form of money laundering is key
to the movement of the proceeds of human trafficking into the
global financial system as many of the loopholes in the rest of
the system are shut. Our understanding of TBML requires greater
analysis as to how it is occurring in human trafficking, and
the red flags associated with it need to be much more carefully
conceived. This will have an enormous impact not only in
countering human trafficking, but other forms of the illicit
economy, such as the Fentanyl trade and the environmental crime
with which it sometimes intersects. This is also especially
relevant to the fishing industry, in which larger numbers of
individuals are subject to labor exploitation.
Thank you very much.
[The prepared statement of Dr. Shelley can be found on page
119 of the appendix.]
Chairman Himes. Thank you, Dr. Shelley.
Mr. Koch, you are now recognized for 5 minutes.
STATEMENT OF BARRY M. KOCH, FOUNDER AND OWNER, BARRY M. KOCH,
PLLC, AND COMMISSIONER, LIECHTENSTEIN INITIATIVE
Mr. Koch. Thank you, Mr. Chairman, Ranking Member Hill, and
members of the subcommittee. Thank you for the invitation to
participate in today's hearing.
My name is Barry Koch. I am a law professor and a private
attorney with a consulting practice in which I provide expert
witness and advisory services in money laundering cases and
financial crimes risk management. I am also a co-founder of the
United States and European Banks Alliance Against Human
Trafficking, a former commissioner on the Financial Sector
Commission, and I was one of a team of compliance professionals
that developed the first quantitative model in the banking
industry to monitor transactional activity for red flags
indicative of labor trafficking and sex trafficking. More
recently, I was an assistant district attorney here in New York
County.
I would like to offer one additional perspective before I
offer five concrete recommendations for the subcommittee to
consider. We are all in emphatic agreement about the moral
imperatives to end human trafficking, but I would like to offer
an additional practical reason for increasing our anti-
trafficking efforts, which is that trafficking on a macro level
is economically inefficient. It depresses innovation. It fuels
corruption and the flow of illicit funds in the financial
system. It deprives governments of tax revenues, and it
disrupts the efficient deployment of human capital. It
privatizes criminal profits while socializing the costs.
So, here are my five recommendations for the subcommittee
to consider. First, increase the use of financial records and
financial data to initiate and strengthen prosecutions. Using
financial records and financial data has been effective in
identifying victims and perpetrators, improving coercion, which
is a required element in a criminal charge, in corroborating
witness testimony, and in serving as the basis for asset
forfeitures.
Further, if witnesses are reluctant to testify because of
the threat of violence against them or family members, or the
risk of being deported, or even because of the fear of being
prosecuted themselves, financial records can be used to pursue
other serious criminal charges that may not require testimony.
For example, prosecutors may bring a case against a trafficker
for tax evasion, structuring, and money laundering where the
trafficker's tax returns report minimal income and assets, yet
the financial records refute those tax returns by illustrating
a lavish lifestyle. Serious crimes that may be related to the
trafficking, such as bank fraud, kidnapping, extortion,
identity theft, and immigration fraud can also form the basis
for asset forfeiture, which is a very powerful tool to disrupt
a trafficking business.
Second, strengthen the use of sanction regimes. There is
already a precedent for the U.S. to use economic sanctions to
designate and punish human rights violators and to deny them
access to the U.S. financial system. Executive Orders have in
the past identified serious and flagrant human rights abuses as
threats to the national security, foreign policy, and the
economy of the United States. And, in this context, the
government has previously sanctioned transnational criminal
organizations, companies, and individuals for migrant
smuggling, human trafficking, and child prostitution. These
sanctions can be designed to be limited and surgical, and can
be used to target industries that are notorious for using child
labor and trafficked labor in their supply chains. In
evaluating this recommendation, it is important to note that
the U.S. financial sector already has a well-developed
operational infrastructure to ensure immediate and sustainable
compliance.
Third, strengthen the risk assessment process employed by
financial institutions as a critical element of their anti-
money-laundering programs. There are material weaknesses in the
current regulatory and operational framework, and here are a
few practical ways to address them.
One, require that the risk of human trafficking be
specifically included in annual anti-money-laundering (AML)
risk assessments. Very few large banks do this, and virtually
none of the mid-sized and small banks or credit unions or money
transmitters and check cashers include the risk of human
trafficking as part of their annual AML risk assessment.
Two, require financial institutions to evaluate human
trafficking as a funding source for terrorist organizations.
Although the current regulatory scheme treats human trafficking
as a reportable predicate crime for money laundering, few, if
any, financial institutions do that. Many national governments,
including our own, have overlooked this issue, focusing only on
the money laundering risks.
There are published cases that report instances where the
Islamic State has conducted online slave auctions in
territories that it controlled. And, more recently, in fact we
saw it just in yesterday's Wall Street Journal, cases involving
Boko Haram, their multiple kidnappings of school children, some
of whom are ransomed, while others are forced into marrying
their captors, while still others are conscripted into serving
as child soldiers.
I am aware of the time, so I will simply refer the members
to my written statement, which goes into additional
recommendations, including how to address the cryptocurrency
risks and how to take a more victim-centric approach to helping
traffickers who are caught up in the criminal justice system.
Thank you.
[The prepared statement of Mr. Koch can be found on page 48
of the appendix.]
Chairman Himes. Thank you, Mr. Koch.
Rev. Dr. Hatcher, you are now recognized for 5 minutes.
STATEMENT OF REV. DR. MARIAN HATCHER, POLICY ANALYST AND VICTIM
ADVOCATE, SURVIVORS OF PROSTITUTION-ABUSE CALLING FOR
ENLIGHTENMENT (SPACE) INTERNATIONAL
Rev. Hatcher. Thank you. Greetings, Chairman Himes, Ranking
Member Hill, Representatives from Illinois, and the members of
the subcommittee. It is an honor and a privilege to share my
personal and professional experience and knowledge in an area
which adversely impacts citizens of this great country every
day.
Human trafficking relies on a business model which feeds on
the vulnerable, benefitting only the predatory. It results in
violence, substandard living conditions, loss of hope, and loss
of life.
Growing up, I had a loving and caring family. However,
molestation by a relative at age 7 forever changed the
trajectory of my life. While I went on to achieve formal
education, corporate success, marriages, and motherhood, the
trauma of that molestation would awaken under negative
circumstances. Those circumstances included a volatile
combination of domestic violence, drugs, and associated trauma.
I was guilt-ridden and ashamed of allowing my first abuser,
but not the last, to hurt me, assault my mother, put a gun to
the head of my oldest son, and terrorize my other children.
When I ran from the danger at home, I embraced a numbness
provided by crack cocaine and alcohol. To feed that habit,
prostitution became a way of life. Eventually, I was
trafficked. Soon, it became impossible to imagine returning to
my loved ones, whom I abandoned. My tribe, parents, ex-husband,
aunts, and other in-laws took care of my children and each
other until God brought me home.
My exploitation eventually led to my arrest, not an
uncommon outcome for so many trafficking survivors. However, I
benefitted from jail-based treatment. And even though arrest
should never be a tool for connecting survivors with services,
having access to those services paved the way to reuniting me
with my family after nearly 2 years, and I found a second
chance.
My second chance resulted in a career, a purpose-filled
next chapter at the Cook County, Illinois, Sheriff's Office,
where I progressed through several roles and most recently
served as policy analyst and victim advocate. Currently, I am
on medical leave due to progressive multiple sclerosis.
From 2005 to 2019, my purpose and responsibilities became
addressing the unaddressed issues of victims who lived,
suffered, and often died because of experiences like mine.
Seeing how many people, especially women of color, were ruined
by systems of prostitution and systemic oppression planted in
me a fiery passion and a focus on gender-based violence. This
dedication was surpassed only by my commitment to hold
predators accountable.
I am here to present my lived experience, both as a victim
of human trafficking and as a professional champion of law
enforcement tactics that center on restorative justice and
accountability. I am not speaking in any official capacity.
Instead, I am here as a result of my lived and professional
expertise, which informs this issue in several roles, including
as a U.S. representative for SPACE International, which means
Survivors of Prostitution-Abuse Calling for Enlightenment--we
represent 10 countries--as a member of Shared Hope
International's Just Response Council, and as a policy
consultant at the National Center on Sexual Exploitation, and
demand evolution.
Based on my experience interviewing hundreds of victims and
watching scores of Federal, State, and local trafficking cases
unfold, I am going to share three high-level observations
regarding the business model of human trafficking. My written
testimony provides a more detailed assessment of these issues.
First, the commercial sex trade is a billion-dollar
industry, as we stated, that causes massive, long-term physical
and psychological damage, disproportionately impacting women
and youth of color. Yet, almost no money reaches victims, even
those identified as victims of human trafficking. The need for
expanded services for trafficking victims is great, and the
lack of investment in services can be addressed in part by
redirecting funds from convicted exploiters in order to help
fund specialized programs that can address persistent scarcity
of appropriate services.
Second, technology can be a tool for investigation and
prosecution by following the money, which also reduces reliance
on the testimony of victims, who face a host of potentially re-
traumatizing experiences in the criminal justice process. Using
technology to follow the money is what King County, Seattle,
did in its investigation and prosecution of the Review Board, a
website set up by sex buyers to promote access to prostituted
individuals. By focusing enforcement efforts on the market
driver, the sex buyers, rather than the individuals being
bought and sold on a website, they are able to dramatically
impact the market for exploitation in their jurisdiction.
Third, despite the current popularity of the mantra, ``sex
work is work,'' my 15 years of experience also tells me that
most women and youth do not want to be selling access to their
bodies. Even those who are not trafficked are selling out of
duress, such as addiction, homelessness, mental duress, or a
combination of these factors. Most want out of the life. Most
encounter major obstacles to achieving financial stability,
including barriers to accessing basic banking services, such as
bank accounts and credit cards. The resulting lack of resources
often leads to re-exploitation as survivors feel they have no
option other than returning to the commercial sex industry.
I want to thank the subcommittee for the opportunity to
testify today, and I look forward to answering your questions
about these critically important issues.
[The prepared statement of Rev. Dr. Hatcher can be found on
page 43 of the appendix.]
Chairman Himes. Thank you very much, Rev. Dr. Hatcher, for
that testimony.
Ms. Mickelwait, you are now recognized for 5 minutes to
give an oral presentation of your testimony.
STATEMENT OF LAILA MICKELWAIT, FOUNDER, TRAFFICKINGHUB
MOVEMENT, AND PRESIDENT, JUSTICE DEFENSE FUND
Ms. Mickelwait. Thank you very much.
Prior to this year, Pornhub was the tenth most trafficked
website in the world, with 42 billion visits per year. The site
boasted 6.8 million videos uploaded per year; that would take
169 years to watch. Pornhub is owned by MindGeek, an
international pornography conglomerate that has obtained a
monopoly on the porn industry.
As the New York Times put it, MindGeek is a porn titan.
MindGeek is also what I call a mega sex trafficker, in that its
sites are infested with highly monetized commercial crime scene
footage of user-generated child sexual abuse, rape, assault,
and other forms of non-consensual pornographic content.
Every video on Pornhub is commercial. In fact, the totality
of videos on the MindGeek sites generate hundreds of millions
of dollars per year. The company knowingly has enabled and
profited from mass amounts of filmed sex acts induced by force,
fraud, or coercion, and the commercial sexual abuse of
children.
Unfortunately, Pornhub is not alone. There is an entire big
porn industry operating similar user-generated porn sites. For
example, MindGeek's biggest rival, WGCZ, which has had a recent
class action lawsuit filed against it on behalf of trafficked
minors, boasts 200 million daily visitors and 6 billion daily
ad impressions on its sites. Like Pornhub, these websites are
set up for exploitation, allowing any user with a cell phone
camera to anonymously upload sex acts with only an email
address. This lack of oversight and accountability is
intentional on the part of these sites because the unlimited
ability to upload content by any user in the world is the
business model that generates the most profit.
For Pornhub and its largest competitors, content is king.
The more content that is uploaded, the more traffic is driven
to the site, and the more profit is generated from advertising,
premium memberships, and the sale of user data. In fact, 50
percent of Pornhub's profit is generated via advertising.
Because profits are the crux of the issue, financial services
actors that facilitate and benefit from the exchange of money
play a crucial role when it comes to enabling or disabling the
crime of sex trafficking on such sites.
For example, after 2 million people from 192 countries had
signed the petition to hold Pornhub accountable, over 300
organizations called for the site to be shut down. Victims
publically came forward. Lawmakers in the U.S. and abroad
called for criminal investigations. Grassroots protests were
being organized around the world, and hundreds of media
articles were bringing attention to the sexual crime on the
site. Pornhub still refused to acknowledge the problem. Even
until October 2020, Pornhub told the media that suggestions
that children were being exploited on the site were conspiracy
theories.
However, in December, a groundbreaking New York Times
expose put pressure on the major card companies to stop
enabling the abuse. MasterCard, Visa, and Discover quickly
responded by confirming illegal content on the site, disabling
the use of their cards, and, in under 24 hours, the 10th most
trafficked website in the world deleted 80 percent of its
content, totaling 10 million videos.
Not only was this a dramatic admission of guilt on the part
of Pornhub, but it was also a demonstration of the power and
influence that financial institutions have in regulating even
the largest websites in the world. This leverage should have
been utilized a long time before it was, not only because it
was the right thing to do, but because knowing that trafficking
was being facilitated with their services and not taking action
is illegal. According to the Trafficking Victims Protection
Act, knowingly benefitting from a trafficking venture is
prohibited.
So, what are the solutions? First, we urgently need the
antiquated law, 18 U.S. Code Sec. 2257, to be amended to hold
websites distributing user-generated pornography responsible
for age verification and record-keeping. This law has been in
place for decades to help prevent child abuse from
proliferating in the porn industry, but it must be updated to
keep up with the times and hold the major online porn
distributors accountable for the content from which they
profit.
Second, we need mandatory, reliable age and consent
verification procedures mandated for every sex act uploaded
online. Reintroducing and passing the bipartisan, Stop Internet
Sexual Exploitation Act, should be a priority. Laws regarding
the disclosure of beneficial owners of companies who own such
sites is also an important accountability measure. In the case
of MindGeek, its executives and owners have intentionally
hidden their identities in order to escape scrutiny. Even now,
we do not know who is ultimately behind the company.
Lastly, enforcement of laws concerning the mandatory
reporting of child sexual abuse material must be improved to
ensure that companies like MindGeek, which has offices,
servers, and substantial consumers in the United States, are
held accountable for failing to report known child sexual abuse
material (CSAM) as legally required. Recent testimony and
publically available data show that despite widespread presence
of child exploitation on Pornhub, the company made no reports
to Canadian or American authorities for over a decade. This is
unacceptable. We need accountability. These actions would go a
long way in the realm of sex trafficking prevention in the
digital age.
Thank you for the opportunity to testify today.
[The prepared statement of Ms. Mickelwait can be found on
page 53 of the appendix.]
Chairman Himes. Thank you, Ms. Mickelwait, and thank you to
all of our witnesses, for your powerful and valuable testimony.
I now recognize myself for 5 minutes for questions.
Ambassador C.deBaca, I would like to start with you. Both
you and Dr. Shelley mentioned supply chains, that Congress is
spending a lot of time thinking about supply chains in the
context of cybersecurity. I wonder if you could give us some
guidance? And Dr. Shelley, since you mentioned it too, I will
turn to you next.
What actually should the Congress be doing with respect to
mandating, requiring, encouraging, or asking for disclosure
that would improve the visibility into supply chains?
Ambassador C.deBaca. Thank you, Mr. Chairman. I think that
one of the most important things is to remove the current
situation in which most companies who are looking at their
supply chains are either already good actors, or are doing it
solely on a voluntary basis, so that they can then back off of
as convenient.
And we saw that just in the last 24 hours with Inditex, the
parent company of Zara, who has evidently taken their zero
tolerance for forced labor policy off of their website due to
Chinese pressure over the Weibo situation. I think that tells
us right there that, even in something that has been as well-
documented, even in something that has been as well organized
as the cotton campaign and the garment work over the last
decade, if it is left to companies to do voluntarily, they will
do it when convenient. Or, they will do it through greenwashing
and ineffective multi-stakeholder initiatives.
So, I think that we need to, just as what we have seen with
the United Kingdom's mandatory disclosures and the Australian
Modern Slavery Act that followed it, building on the example of
the California Supply Chain Transparency Act, I think it is
time for a United States Supply Chain Transparency Act at the
national level, which does not make disclosure or doing work in
your supply chain at all voluntary on the part of firms.
There is a lot that one can do by looking at the Federal
procurement regulations, which again are bipartisan responses
from both the Obama and Trump Administrations. President Trump
and his folks took the Obama Executive Order and helped to put
teeth into it, and I think it just shows that this is a
consensus issue, that we can come together.
Chairman Himes. Thank you, Ambassador.
Dr. Shelley, let me ask you to chime in if you would like
to. I do have one remaining question for Mr. Koch, though, so
let me ask you to be brief, if you would?
Ms. Shelley. Certainly. I certainly endorse what Ambassador
deBaca says about supply chain transparency and how we need
that on the national level and not just in California. But I
think there also needs to be much more of an enforcement
mechanism and not just voluntary declarations because it has
not been as effective as needed.
I have been working for the last 2 years on an NSF grant
looking at illicit supply chains in regards to human
trafficking, and what is evident from this research is that
many of the key notes intersect with the legitimate economy.
So, as we are looking at, and as was just talked about, online
activity and advertisements, so, that intersects with the
internet. Then, we have transport of victims, which often
occurs through commercial vehicles or often with ridesharing.
And then, the victims, of course, who are exploited by the
traffickers are taken often to hotels and motels, which takes
them and places them in another commercial environment, which
is a legitimate part of our economy.
So, what we need to be doing is focusing much more on the
intersection of this illicit phenomenon that is resulting with
so much tragedy and how it is being facilitated and supported
by legitimate and large-scale companies in the United States.
Because many of the hotels are large chains, and they have,
until there started to be suits from victims, not paid enough
attention to what was going on in their hotels and establishing
policies. So, this is not something that is existing totally in
the illicit and dark economy.
Chairman Himes. Thank you, Dr. Shelley.
Mr. Koch, I only have 9 seconds left, so I am going to ask
you to answer this question in written form. I am very
interested to know whether there is alternative financial
information that our current anti-money-laundering efforts do
not capture that would be valuable in this effort. Again, I am
out of time, so I cannot ask you to answer. But I would also
invite the other witnesses, if they have thoughts about data
that we might capture that would be helpful, to also respond
subsequent to this hearing.
With that, I recognize the distinguished ranking member,
Mr. Hill, for 5 minutes for questions.
Mr. Hill. Thank you, Mr. Chairman, and again, thanks for
the hearing. And what an excellent panel. Everybody on our
subcommittee is learning a great deal and we appreciate the
heartfelt, detailed, and recommended ideas in your testimony.
Speaker Pelosi, whenever she gives an interview, always
makes a statement--and I am going to paraphrase here. It is
always, for her, she says, about the children. And so, this is
certainly a major challenge when one thinks about human
trafficking both on the border, domestically, and in other
countries as a part of the transnational crime movement. I know
this is a desponding topic for so many, and Speaker Pelosi
often mentions it is always about the children. I hope that we
on this subcommittee think about that, that it is in fact often
about our youngest, most vulnerable people.
I mentioned in my opening statement about the encounters on
the border, 100,000 alone in February, the highest in 7 years.
One report I read said the highest in 15 years. So, this is a
key challenge for us right now in the country. It is definitely
a crisis. Jeh Johnson, who was our former Secretary of Homeland
Security under President Obama, said that anytime there were
more than 1,000 encounters a day, it was a bad number. So, I
hope that puts in perspective the challenge that we have.
Ambassador C.deBaca, when an unaccompanied minor crosses
the border into the United States, tell us how Health and Human
Services and other agencies are responsible for the child,
screening potential sponsors to ensure a child is not put into
a harmful situation or a trafficking situation here in our
country.
Ambassador C.deBaca. As a former Federal prosecutor, my
direct responsibility was investigating and prosecuting cases.
But my understanding as to what HHS does with unaccompanied
alien children is that within a short timeframe--I think 48
hours--they are tasked with identifying sponsors, preferably
family members, whom the children can then go ahead and travel
to join. There was a consensus in the 2008 Trafficking Victims
Protection Act Reauthorization that the prior practice of
releasing the unaccompanied alien minors back across the border
was simply creating a revolving door and was creating an awful
lot of sexual assault and other mistreatment on the other side
of the Mexican border.
Mr. French. Thank you very much. I agree. I think it is a
huge challenge. And right now, those held in unaccompanied
conditions are--70 percent are not being met with any kind of
resolution within 72 hours.
Mr. Chairman, I would like to ask unaimous consent to
insert in the record a study that was released by the Senate
Permanent Subcommittee on Investigations on Protecting
Unaccompanied Alien Children from Trafficking and Other Abuses.
Chairman Himes. Without objection, it is so ordered.
Mr. French. Thank you very much.
I was talking to my friend Melissa Dawson today. She runs
the Centers for Youth and Family here in Arkansas, and they do
an outstanding job helping our kids who are victims of
trafficking here in the State. I visited that process, and I
admire her so much. She talks about the issue of technology
increasing trafficking, and she also talked about her concern
that she cannot see cases get prosecuted because they are
complex around--to track the transactions, and she is concerned
about Bitcoin and cash apps.
So, Mr. Koch, is there a way that cash apps and other
currencies, such as Bitcoin transactions, could be monitored
more effectively for suspicious activity?
Mr. Koch. Yes, absolutely. And I, again, would refer the
subcommittee to my written statement where I address this, but
let me explain the context in which I address it because it is
a very important question.
It is the context of public-private partnerships, which the
Congress did cover in the Anti-Money Laundering Act of 2020.
There are some not-for-profit startups and there are other
companies that are doing some brilliant, cutting-edge work in
looking at cryptocurrency analysis, in looking at the dark web
for specifically this purpose, and they are sharing the
information with law enforcement and with the financial sector.
And this information provides actionable intelligence for
investigations. More should be done, but the public-private
partnership theme, which I know your subcommittee is concerned
with, as well, is one very effective way to go in that
direction.
Mr. French. Thank you for that. I will have some additional
questions for the record, and Mr. Chairman, I yield back.
Chairman Himes. The gentleman's time has expired.
The gentleman from New Jersey, Mr. Gottheimer, is
recognized for 5 minutes.
Mr. Gottheimer. Thank you, Chairman Himes and Ranking
Member Hill, for calling this very important hearing today, and
to all of our witnesses for being here.
Many of the same online tools that we all use to keep in
touch with loved ones or conduct business during this pandemic,
as we all know, are increasingly being utilized by those who
wish to do harm to our nation. This harm is not limited solely
to political extremist hate and propaganda by groups like Hamas
and Proud Boys, but also comes as illicit activities, such as
groups that utilize social media to advertise or recruit
potential human trafficking victims. This, to me, is
unacceptable. Tech companies and social media platforms should
be doing everything they can to stop the proliferation of
harmful content.
Ms. Mickelwait, we see this time and time again, as
websites drag their feet to remove illicit content and fail to
report it to the authorities. Should tech companies be held to
a higher liability standard when it comes to allowing this
material to stay online? And what role could the financial
services industry play to help stop illicit actors from
profiting from the content generated by human trafficking?
Ms. Mickelwait. Thank you for that question. I think what
is important here is to highlight the harm that these recorded
crime scene videos do to these victims. It is one thing for a
victim to be subject to rape, to be subject to trafficking. But
what I have heard from countless victims, whom I have spoken
with about their abuse online, is that it is the
immortalization of their trauma--they call it that--because
they go on with the knowledge that their abuse, that their
trauma, the worst moments of their life, will live on in the
digital space long after they are gone. And they live with that
terrorizing knowledge.
I think that there is this high, high level of
responsibility for sites like Pornhub, and like MindGeek-owned
sites like XVIDEOS, xHamster, and others that are distributing
sex acts, often containing minors, containing trafficked women,
containing those who have not given their consent to be
uploaded and distributed online. And I think that we must hold
them accountable. We need to see age and consent verification
when a sex act is uploaded online. I think that would go a long
way in the area of prevention, like I mentioned.
Mr. Gottheimer. Do you think the tech companies should be
held to a higher liability in general? Should they be held more
responsible for this?
Ms. Mickelwait. I think that they should be held
responsible as any company that would knowingly benefit from a
trafficking venture, would knowingly benefit from the
distribution of child sexual abuse material. We have those laws
in place, and I think that they need to be applied.
Mr. Gottheimer. Thank you. If I can turn to the Ambassador
now, do you believe that the current financial intelligence
system we have in place is effective at providing the proper
data to law enforcement to track and combat human trafficking
through the financial system?
Ambassador C.deBaca. I do not. And I think that one of the
things that we have seen is that it has been a slow uptake of
the SARs checkbox that has been added. It took a lot of staff
work and it took a lot of dedicated folks in both the banking
industry and over at Treasury to get that done. But it really
needs, I think, to get disseminated out to the banks.
And, then, back at the Department of Justice and in the
U.S. Attorneys' offices, the folks over in the Asset Forfeiture
and Money Laundering Sections are working more closely with the
folks over in the criminal section of the Civil Rights Division
so that we can incorporate in following the money.
Mr. Gottheimer. And just to follow up on that, Ambassador,
should there be a coordinator at Treasury working with the
Secretary? How would you provide this agency-wide coordination
to help stop, human trafficking? What steps should we take
specifically?
Ambassador C.deBaca. One of the things that we saw during
my time as the coordinator for the U.S. Government was that
when a Secretary's office brought the anti-trafficking fight
into the highest level of the agency, things started getting
done. We saw that at Transportation. We saw it at the
Department of Education. We even saw it at USDA. So, I think
that it would be a salutary thing for the Department of the
Treasury to make that move, as well.
Mr. Gottheimer. Thank you. And it is something I have been
working with Treasury on to make sure that we are using all of
our coordination and to stand up to the social media websites
and cryptocurrencies and stay one step ahead here, which I
think is key. And we will continue to work together to make
sure that happens so that we are well-coordinated and our
arsenals combat this threat.
So, thank you again to our witnesses for your time today. I
yield back.
Chairman Himes. The gentleman yields back. The gentleman
from Texas, Mr. Williams, is recognized for 5 minutes.
Mr. Williams of Texas. Thank you, Mr. Chairman, and thank
you, Mr. Ranking Member.
Regardless of whether my Democratic colleagues want to
recognize what everyone else can see in plain sight, there is a
crisis at our southern border. There were 100,000 illegal
immigrants detained in the month of February alone, and a large
number of these were children and family units coming across
our border.
I am extremely concerned that as our border patrol agents
are being overwhelmed by all these people, it is making it
easier for human traffickers to slip through the cracks and
expand this horrible practice in this country.
Governor Greg Abbott, from my great State of Texas, summed
up the issue well in a letter he sent to the Biden
Administration earlier this week about what we are seeing on
the ground. He wrote, ``Recent decisions by your administration
are emboldening dangerous cartels, smugglers, and human
traffickers to ramp up their criminal operations. In many
cases, these criminals entice unaccompanied minors into
inhumane conditions and expose them to abuse and terror.'' And
I, along with many of my fellow Texans, share the exact
concerns of our Governor.
So, Ambassador, what additional steps should HHS be taking
to ensure that children apprehended at the border are not being
trafficked?
Ambassador C.deBaca. I think there areat a couple of
things. First of all, I think it is not just HHS, but DHS
itself, as you said. And I think putting all of the onus on our
border patrol personnel takes one of the most important tools
out of the tool chest, and that is the folks over at Homeland
Security Investigations (HSI).
What we know about human trafficking is that it doesn't
manifest itself in transit. It is something that typically is
only known once people have gotten to their destination and are
put into forced labor or sex trafficking. We are talking about
an interior enforcement priority that HSI, I think, is good at,
but always lacks the efforts, the money, the budget, the
agents, et cetera, for it.
I think there are the kind of things that we heard from
Ranking Member Hill about the situation up in Arkansas, with
HSI agents being able to work hand in glove with their local
counterparts. I think that is going to be really important.
As far as the HHS is concerned, there is good leadership
over there in the counter-trafficking office, and I think that
the procedures, as I understand it, are being worked on. I am
not part of that effort. But I would say that typically, one
wants to have as much information as possible about the
families and placements that those children are traveling to
join.
Mr. Williams of Texas. Okay. Thank you. I do have other
questions. But before I move on, I just need to reiterate one
more time that we have a serious problem at our southern
border, and so far, we have not seen the leadership that is
needed out of the White House to get the situation under
control.
Mr. Koch, we have been told that the current Currency
Transaction Report (CTR) and Suspicious Activity Report (SAR)
thresholds are so low that it makes finding bad actors
extremely difficult. We have heard it described as trying to
find a needle in a haystack. And since there is so much
information to sift through, how can we make the use of these
suspicious transaction reports more useful for law enforcement?
Mr. Koch. It should be part of a larger approach within the
financial industry to deny the traffickers access to the
system. Much of what has been discussed over the past few
minutes has been reactive. And that is not bad, but it is
different from preventive. And what is missing from the
regulatory environment is that the global banking system is not
doing risk assessments for trafficked labor in supply chains of
their corporate customers, and that is a gaping hole. It is
probably much larger than the SARs that talk about credit card
fraud and identity theft and CTRs that report $11,000 in
currency transactions. So, I think you have to combine the two.
But as far as the actual thresholds, my view is that the
CTR threshold is the correct threshold, and I would take
guidance from law enforcement there on changing the number. It
has been discussed many times over the years and they have
consistently said, don't change the number.
I would take the same view with the SARs. It is not the
number that matters. It is the narrative and the sophistication
of the transactional analysis that I would focus on.
Mr. Williams of Texas. Okay. Thank you. And, Mr. Chairman,
I yield back.
Chairman Himes. The gentleman yields back.
The gentleman from New York, Mr. Torres, is recognized for
5 minutes.
Mr. Torres. Thank you, Mr. Chairman.
The 115th Congress, for the first time ever, established an
exception to Section 230. The exception allows tech companies
to be held civilly liable for sexually exploitive content.
I have a question for Ms. Mickelwait. To what extent has
the law been effective at diminishing the online market for
sexually exploitive content? Because I gather from your
testimony that online platforms remain widespread facilitators
of sex trafficking, even with the threat of civil liability.
Ms. Mickelwait. One thing that we are seeing now is the
utilization of that law with regard to MindGeek, the specific
case. Since December, there have been multiple lawsuits filed
against the company, utilizing that carve-out. We are seeing
two class action lawsuits on behalf of trafficked minors: one
filed in California; and another filed in Alabama. And we also
have a filing of 40 women who were trafficked on Pornhub, who
are also utilizing that law. So, yes, we are seeing that this
was an important accountability measure and that it is being
utilized and, so, I think it is a positive thing.
Mr. Torres. And you rightly pointed out that the Nicholas
Kristof expose, ``The Children of Pornhub,'' demonstrates that
public scrutiny can create a powerful incentive for companies
to do the right thing. Is there a role for the Federal
Government to play in monitoring websites for sexually
exploitive content and calling out companies that continue to
facilitate sex trafficking?
Ms. Mickelwait. I believe that there is a role for the
government to play in accountability for these sites. My
recommendations are not just for monitoring, but really, the
enforcement of laws, the updating of laws that we have already
on the books. For example, I mentioned 18 U.S Code Sec. 2257.
This was a law that was adopted decades ago, and the problem
with the law is that it is antiquated. It is old. It was
implemented to prevent child sexual abuse, rape, and
trafficking in the pornography industry back when DVDs and VHS
tapes and magazines were the primary distribution method for
this content. It needs to be updated, and I think that would go
a long way in helping to prevent child exploitation, and
trafficking on these big porn sites.
But also, like I mentioned, the Stop Internet Sexual
Exploitation Act, which focuses on age verification and consent
verification for sex acts that are being uploaded online. I
think, again, that is a very, very critical and important
priority that we must focus on to help prevent the distribution
of this kind of content in the digital age.
Mr. Torres. You made a powerful point about the
immortalization of trauma, and I am wondering, how do we best
prevent that? Should porn sites be more like YouTube, which
does not allow for downloading? How do we best prevent the
immortalization of trauma as you described earlier?
Ms. Mickelwait. First, I want to point out that up until
the New York Times piece pointed out that there was this
download button on every single video--and think about that, 7
million videos uploaded per year. And like I said, it would
take 169 years to watch this content. And the company designed
the site in such a way that they enabled a download button on
every single video, even though they were not verifying age and
consent for upload. And we have records that show that they
only had less than 10 moderators per shift monitoring this
content on the site.
This is kind of a business model. The way that these sites
are set up is to have this unlimited ability to upload. Again,
because content is king, because traffic is what drives
profits. I think that, obviously, we need to disable the
ability for those downloads.
But even if you disable the ability for downloads, people
in this day and age can screen-record anything online and then
they can redistribute it again and again and again and again
for the rest of time, once it is uploaded initially onto any of
these sites. So, I think the preventative measure is, before
upload, these sex acts need to be vetted. There needs to be
accountability before upload, before these acts get onto these
sites. We need those kinds of preventative measures in place.
Mr. Torres. And then I have a quick question for the
Ambassador. We all know China's role in the labor trafficking
of Uyghur Muslims. Are there any other nation states, any
particularly egregious actors that are known to aid and abet
human trafficking, and have we imposed sanctions on those
countries? And that will be my final question for the
Ambassador.
Ambassador C.deBaca. Yes. There are both in state-sponsored
forced labor, such as the North Korean labor export scheme,
which sends enslaved North Koreans into other countries,
especially in industrial and manufacturing. But we have also
seen sanctions on countries for mistreatment of trafficking
victims, such as Iran and others.
I think one of the things that, as we are looking at--
Chairman Himes. Ambassador, I'm sorry. The gentleman's time
has expired. I need you to wrap it up quickly.
Ambassador C.deBaca. Yes. Cotton is not simply a Uyghur
problem. It also is a problem in the former central Asian
republics.
Chairman Himes. If you would like to elaborate on that
answer, you can do so in writing for the record. The
gentleman's time has expired.
The gentleman from Ohio, Mr. Davidson, is recognized for 5
minutes.
Mr. Davidson. Thank you, Mr. Chairman, and thanks to our
ranking memberand to our witnesses. I just appreciate that we
are having this hearing on an important topic.
I want to also thank my colleague, Ann Wagner, who has
really done a lot of work on this in my time on the committee
now and my time in Congress. It has been rewarding to be part
of cosponsoring some of the bills she has worked on over time.
So, thanks for the work that you all are devoting to really
ending this practice, or at least making the people who
participate in it accountable. It is a black market practice in
the United States, sex trafficking, human trafficking, and we
have a very large black market.
Ambassador C.deBaca, what is the makeup of the demand
component of this? You talked about interior enforcement when
Congressman Williams was talking about it. How do we get after
the demand? What is the profile of the demand and how do we
focus on them?
Ambassador C.deBaca. I think that one of the things that we
see is there are two types of demand. There is demand for
commercial sex and demand for cheaply-made goods that are kind
of derivative demand that traffickers then use enslavement and
abuse to meet. And then, there is the other demand, the even
more pernicious demand, which is specific to child commercial
sexual exploitation, almost a pedophilic demand for images or
sexual contact with minors.
And I think we have to address both of those demands. If we
only focus on the most heinous, I think that we are allowing
these industries to flourish in those cracks.
Mr. Davidson. I want to focus on where this happens. And
then, I guess I am wondering, are immigrants and minorities
more exploited as victims of human trafficking? Does that seem
to fit the profile in the supply chain?
Ambassador C.deBaca. This week in my class at Yale, we are
just getting to the 1970s, and that is kind of the pivot point
when the African-American community stops being the dominant
group in which enslavement, modern slavery, is happening in the
domestic service or agricultural farm work. In both of those
sectors, we have seen a replacement of that previously excluded
and vulnerable community by a predominantly immigrant
community.
In sex trafficking, I think we still see folks from the
minority communities, and, I think most troubling, the
indigenous community. The tribes are seeing an awful lot of
problems that are tied into a number of the other social ills
that plague the tribes.
Mr. Davidson. Thank you for that. And I think it just
highlights how important it is, the interconnectedness here,
with fixing our broken immigration system. It creates a massive
black market. People are exploited on it tremendously. And we
are a welcoming country for people who do it legally, but the
broken nature of the legal system in the United States, coupled
with the massive appeal of our country as a true land of
opportunity, creates a big desire to be here even if it means
being here illegally.
And I think the interior enforcement should not be looked
at as hostile; it should be looked at as compassionate. We have
to end these practices. We have to secure our borders. It is a
component of national security, and it is a component to end
human suffering and exploitation, or at least diminish it here
in the United States.
I think one of the areas that we should look at--and it is
noticed in this bill. It is not so much a focus here on the
Securities and Exchange Commission. Congressman Torres talked
about Uyghurs and Uyghur exploitation in China. And, as a
component of our foreign policy, I think it has been a great
legacy for the United States to deal with human rights, and
China is clearly abusing their Uyghur population in virtually
every way that you could imagine.
I think that the bill that we noticed, talking about how to
turn the SEC into sort of a law enforcement mechanism for other
good causes, is wrong-headed. We should look at sanctions, and
I would love to work with Congressman Torres on that, and
others in the committee, because stronger things with the tools
that we already have using the Office of Foreign Assets Control
(OFAC) would be more useful than trying to go passively and
just go after publically-traded companies and their supply
chains.
So, thanks for the work. I look forward to collaboration
with members of the committee and with some of our witnesses if
you have any ideas. So, with that, I yield back.
Chairman Himes. The gentleman yields back.
The gentlewoman from Pennsylvania, Ms. Dean, is recognized
for 5 minutes.
Ms. Dean. Thank you, Mr. Chairman, and thank you for
bringing together such an amazing panel of experts.
I want to ask a couple of quick questions.
Rev. Hatcher, how can we more effectively support survivors
of human trafficking, both their physical and mental health,
but also their financial well-being?
Rev. Hatcher. That is a great question. First of all, we
need to turn the pain into purpose and the exploitation into
economic empowerment. Those two things together give survivors
a chance. There is that lack of hope. If you have no hope,
there is no chance of trying to become a productive member of
society. And we are talking about lives who are utilized for
constant pounding and sexual activity that numbs them to what
is really going on in the world, what really is good about
being alive and being a human being and being a person who is
able to contribute to the world. And to have an enriched way of
looking at things, to have dignity and respect. So, the most
important thing is to get victims and survivors to a point
where they want to live, where they want to be a part of
society, where they feel they can contribute to society.
I was blessed to be in an environment at the Cook County
Sheriff's Office that believed in rehabilitation. The domestic
violence sent me to that really awful place. I was missing for
2 years. But I ended up in this safe place, if you happen to be
jailed, but this safe place that gave me services. Okay. Then,
my 17 years in the corporate sector brought that together.
But I am not the normal profile when it comes down to
prostituted and exploited individuals. Most of them have not
had an opportunity to be contributing members of society
before, to be able to know that there are norms that do not
include their body being sold to meet their basic needs.
So, we need to make sure that there is no long-term impact,
like criminalization. For me, I was in a forward-thinking
environment and was hired with a felony conviction that was not
until 13 years later granted executive clemency by Governor
Rauner. Think about that. The Sheriff's office said, ``We
believe in rehabilitation, it is okay, we know that you have
things to contribute.''
We have to not criminalize survivors. We have to, when they
are criminalized, provide vacatur opportunities. And from the
very beginning, there has to be a plan. There has to be a plan
to provide, meet that person where they are at, walk side by
side with them to know exactly what they need. And it takes a
team. It takes a multidisciplinary team.
Ms. Dean. Thank you, and I apologize. I could listen to you
give us more information, but I only have so many minutes, and
I want to try to get one other question in that sort of
follows. But thank you for what you just said and what you
highlighted. It somewhat follows what Mr. Himes was asking when
his time stopped.
Mr. Koch, in your testimony, one of your recommendations
was for financial institutions to require the risk of human
trafficking to be included on the annual money laundering
assessments, which is something few currently do. What would
that assessment look like? Can you explain how it would benefit
and ultimately reduce trafficking?
Mr. Koch. The benefit would be that it would keep
trafficking out of that institution. It would make it more
difficult for large projects and large corporations that have
trafficked labor and child labor in their supply chains to
access financial products.
What it would look like--there is actually a model. It is
an interactive model that is in my written statement that we
will not have time to go through today. But what it would look
like is that the banks would evaluate. If you take a very large
construction project, for example, look at the construction of
the football stadium in Qatar in connection with the upcoming
World Cup soccer tournament.
If you believe that there is trafficked labor in the
construction supply chains, why hasn't the very sophisticated
credit analysis that all the big western banks have gone
through when they decided to open up lines of credit in the
hundreds of billions of dollars, why hasn't that analysis
included an analysis about whether the construction crews have
trafficked labor? If the analysis expands to that, you can get
representations and warranties and covenants in your credit
facilities so that you can address this problem. And if the
borrowers don't address it, they will be denied credit.
Ms. Dean. Super. Thank you, Mr. Chairman. I yield back.
Mr. Chairman. The gentlelady's time is expired.
The gentleman from Ohio, Mr. Gonzalez, is recognized for 5
minutes.
Mr. Gonzalez of Ohio. Thank you, Chairman Himes and Ranking
Member Hill, for holding this important and timely hearing. And
thank you to our panel of witnesses. It has been incredibly
important to hear your testimonies and your insights into this
critical issue.
Online child exploitation is one of the worst issues facing
our society. Last year, the National Center for Missing and
Exploited Children received more than 21.7 million reports of
child exploitation, representing a 28 percent increase over
2019, as folks have been stuck inside during this pandemic.
Congress must pay increased attention and provide the requisite
funding, but also make the appropriate changes to the law.
On that note, Ms. Mickelwait, I want to start with you and
pick up where Mr. Torres left off on the immortalization
component. I think, frankly, the suggestions that you made in
your testimony are common sense. I look forward to working with
anybody who wants to work on this to make sure that we get
these implemented. I cannot see why we would not want reliable
agent consent verification procedures for any image of a sex
act uploaded online.
But on the immortalization piece, what recourse do victims
have, if any, to get the content taken down? Are they able to
use the tools of the law to get it taken down? Or how would
they go about doing that?
Ms. Mickelwait. This is a huge, huge problem, because even
when they are able to get this content taken down, what we find
again and again is that it gets re-uploaded again and again and
again. And so, these victims live in a state of kind of
obsession with trying to find their abuse material online.
They live with the fear that they cannot even go out
sometimes to the grocery store or apply for a job. They believe
that somebody has seen the videos of their exploitation and
abuse. Often, it causes them to be suicidal, to have suicidal
tendencies and thoughts, severe depression, all of these
things. Once these videos get online, these images, it is
almost impossible to guarantee that they won't be uploaded
again.
There are some measures that are implemented on these sites
for victims to be able to remove content, but often, they are
ignored. We have many cases, and a case, for example, of
Pornhub--
Mr. Gonzalez of Ohio. Can I reclaim my time? I'm sorry, Ms.
Mickelwait, just for a second. I saw Dr. Hatcher nodding her
head. I just want to let her into the conversation. Does that
resonate with you, the story that Ms. Mickelwait was just
telling?
Rev. Hatcher. Absolutely. I agree with everything that she
is saying. It causes extreme re-traumatization, and it is like
it becomes their job to try to find where their images are,
where these videos are. And that constant angst and anxiety of,
has someone seen this? And in a lot of cases, they have. So, it
is a constant sense of re-traumatization.
Mr. Gonzalez of Ohio. Thank you for that.
Mr. Koch, I want to switch to you. One of the biggest
barriers to effective tracking of money involved in human
trafficking is the widespread use of aging technology by banks
as they monitor transactions for signs of money laundering. As
you may know, banks are required by law to monitor the
activity. Most monitoring systems are rules-based, so programs
with an if-then scenario. So, if certain things occur, then
transactions will be flagged.
Today, it strikes me we could and probably should be using
AI-based technology, like machine learning, to recognize
suspicious patterns. One, do you agree with my assessment? But
then, two, what would need to happen to convert the industry to
more high-tech tools?
Mr. Koch. First of all, yes, I agree with your assessment,
although the industry has progressed quite a lot in the last
few years from the traditional rules-based. Many of the large
banks are using machine learning and AI. The smaller banks and
the credit unions are not, and those are serious
vulnerabilities. And there are ways to address those, as well,
with some of the public-private partnerships. But absolutely,
your fundamental point about using technology is critical.
And I would add something to that. In addition to machine
learning and AI, in addition to the rules-based, there is the
typologies-based, and that comes from information sharing
between law enforcement and the private sector. When you do a
post-mortem after you bring down a trafficking ring and you
understand how they access the system, how they move their
money, how they stole identities and the like, you can develop
automated rules that are based on those typologies to prevent
and detect those instances from happening again. So, I would do
all three.
Mr. Gonzalez of Ohio. Thank you, and I yield back.
Chairman Himes. The gentleman's time has expired. The
gentleman from Illinois, Mr. Garcia, is recognized for 5
minutes.
Mr. Garcia of Illinois. Thank you, Chairman Himes and
Ranking Member Hill, for holding this important hearing. And
thanks to our witnesses for joining us today, especially Rev.
Hatcher, who hails from Cook County here in the Chicagoland
area.
I arrived in this country from Mexico when I was a child.
My father came to work under the Bracero program, a government
program that brought Mexican workers to the United States.
Since then, I have seen our global economy change, and I have
seen the evolution of legal and illegal ways to supply labor to
employers. And I have seen that human rights and labor rights
always go together. It is almost impossible for someone with no
labor rights to speak up about trafficking, and it is hard for
a person without status to speak up about labor exploitation.
So, I want to direct my first question to Ambassador
deBaca. When some people hear about the horrors of human
trafficking, their first instinct is to close the borders and
shut off immigration. Does that make sense to you? Or does
criminalizing immigration just make trafficked workers more
vulnerable to corrupt employers and traffickers?
Ambassador C.deBaca. I think what we have seen, Mr. Garcia,
is exactly I think what you are noticing, which is that the
more securitized the border is, the more there becomes a need
to go to the gray economy and find facilitators and smugglers
to get into that country. And without having sane and sensible
guest worker programs with protections, without having family
unification, without having alternative means of immigration,
it is not simply that the people will come. We should not put
this on the workers. It is that the farmers want the work. The
people who own the companies want the workers.
Frankly, it was the North Carolina agriculture community
that pushed for an African guest worker program before the
Civil War because they thought that it would bring down the
price of slaves. It was the folks who were building the
railroads who pushed to bring in Chinese folks, whom they later
excluded. So, I think that we need to look at it not simply as
an issue of the foreign worker who wants to come to the United
States and get a job, but thinking about how the American
employers can actually get the folks that they need to do the
work. There are plenty of people who are more than willing to
come here and contribute and do that work.
Mr. Garcia of Illinois. Thank you for sharing that insight.
Ambassador, in your testimony, you mentioned the construction
industry and how we need to hold traffickers accountable, not
only at the work sites, but for the financing and insurance of
construction projects, as well. Do you think there is a way
that workers and labor organizations, like trade unions or
worker centers, could be helpful in identifying exploitation
and holding these groups higher up the chain accountable?
Ambassador C.deBaca. Yes, sir. We certainly saw that in
agriculture with the Coalition of Immokalee Workers, who
started out in tomatoes and pickles and I think oranges, many
of whom were survivors of a notorious coup leader in the 1990s
in his slavery ring.
But what we have seen is a worker center and a construction
union in the Twin Cities, in Minneapolis, who have taken that
approach, the Immokalee approach, and started to work to clean
up the construction sites and the construction industry there
in Minnesota. And I think that when we actually bring together
the worker power, we can set a lot of standards that then good
employers can look to as far as how they govern their supply
chains and their worksites.
Mr. Garcia of Illinois. Thank you very much.
And again, I appreciate all of the fantastic witnesses for
shedding light on exploitation and trafficking of humans. Thank
you so much.
Chairman Himes. The gentleman yields back.
The gentleman from Texas, Mr. Taylor, is recognized for 5
minutes.
Mr. Taylor. Thank you, Chairman Himes. I appreciate it. And
Ranking Member Hill, I just wanted to echo your encouragement
for, if not in-person hearings, hybrid hearings. I know we
safely did those last year and hoped they would come back. I
think it really facilitates our ability to interact with each
other in person.
And I will just further echo Ranking Member Hill's comments
about the crisis on our southern border. A few days ago, I was
at an emergency intake site in Dallas, Texas, where a facility
that had zero--did not even have a signed lease last week, hit
capacity at 2,300 children as a result of what officials there
called the greatest crisis they have ever seen. And it is very
worrisome, and I know that it is going to result,
unfortunately, in more human trafficking as a result of just
not having the personnel to secure our border.
Shifting over to this topic, I wanted to build on my
colleague, Representative Dean's, questions about helping
survivors to take the next step. Something I worked on when I
was in the Texas legislature was legislation to help victims of
human trafficking to be able to seal their records. Many of
them, while they were trafficked, had been convicted of crimes
while they were being trafficked, and those criminal
convictions would preclude them from really living full and
productive lives.
Rev. Hatcher, I was going to ask you--if I may be so bold
as to ask you--did you incur a conviction while you were being
trafficked or did you know others who had gone through that?
Rev. Hatcher. Yes. So, that is my story. Thank you for
asking that question. I was arrested and I was actually sent
to--my traffickers sent me out to get drugs to bring back to
where the sex acts took place for enormous amounts of time. All
it was, was the selling of sex, and the use of drugs was 24-7.
So, I was sent out to do so. And I was arrested.
I mentioned that I received executive clemency from then-
Governor Rauner for a conviction for drugs. But the application
for clemency was built on the fact that I was a trafficking
victim and that I was under duress and sent out to do their
bidding, which is the typical story, sir. We are the ones who
end up with the convictions and the difficulties in getting
back in the mainstream society.
Mr. Taylor. Sure. I know that in Texas, we were able to
pass laws to help victims like yourself who were convicted of
crimes while they were being trafficked to be able to seal
their criminal records. Did they have a similar law for the
crimes you were convicted of in the State of Illinois?
Rev. Hatcher. The reason why my only recourse was to
receive executive clemency and expungement by the Governor of
Illinois was because in Illinois, the law is more narrow. And
in Illinois, there is a law--if the convictions had been
related to prostitution or human trafficking, everything would
have been able to be vacated. But because it was a drug charge,
a drug charge was not in that, so there were certain prior
crimes that did not qualify.
Mr. Taylor. Yes. And I will say, I was very surprised when
I came to Congress and reviewed--there is no sealing law in
Federal statute today. A sentence to a Federal penitentiary
should not be a life sentence. And I think if we want to help
people get their lives back, we need to work on that.
I actually signed on as an original lead with my colleague
from New York, Hakeem Jeffries, on a piece of legislation to
expand the very narrow--we have a very narrow piece of
expunction. But I am also working with him on this sealing law
to try to help people who have been convicted of a crime, who
served their time, to be able to seal their record so that they
could take that next positive step in their life the way that
you have. I think you really exemplify--
Rev. Hatcher. Well, they could seal them. Yes. I should
say, sir--excuse me for interrupting. They could seal them. But
in terms of making it go away, then yes.
Mr. Taylor. But understand, under Federal law, there is no
sealing provision today. None.
Rev. Hatcher. No. And it is terrible--
Mr. Taylor. It would make sense to me to take the lessons
that we have learned on crime at the State level and apply them
to the Federal level and really give so many millions of
Americans their chance to get their lives back.
Mr. Chairman, I yield back.
Chairman Himes. The gentleman's time has expired.
I now recognize the Chair of the Full Committee, Chairwoman
Maxine Waters, for 5 minutes.
Chairwoman Waters. Thank you so very much, Mr. Chairman. I
am so pleased you are holding this hearing. And this is a
subject that has been talked about and talked about and talked
about, and I think now what you are doing is providing the
leadership for us to really do something about it.
I would like to address my question to Rev. Dr. Hatcher and
Mr. Koch. You have worked directly with survivors and with
efforts to support survivors. Without proactive engagement, it
can be difficult for survivors, whose credit and identities
have been misappropriated and damaged, to secure employment or
shelter. Lacking identification such as birth certificates or
driver's licenses, they face hurdles in accessing the banking
system and navigating services to access benefits and restore
identities. Can you illustrate how the financial services
industry can help and how non-profit services, law enforcement,
and government can take action to support survivors so they may
escape this nightmarish cycle of abuse?
Rev. Hatcher. First of all, it is an honor, Chairwoman
Waters. I am a great fan of yours.
So, I will give you an example. What happened when I was in
my exploitation was, one of the traffickers involved in my
orbit got me to sign for a car, because, before my trafficking
experience, I had A-1 credit, so he had me sign for a car. I
still have that, even though it was years ago and I have worked
around it, it is still something that they call me for. And, of
course, there is interest. But that in itself, there was fear.
First of all, survivors have a hard time making it back
because of--I had financial literacy in my previous life, but
after exploitation, I did not even--I was scared. And I did not
have the ability at that time to get my credit report run, out
of fear. I knew how to do it, but most survivors--many do not
ever have a credit report run, know what they need to do to
rebuild their credit, or obtain for the first time a credit
card. It took me time to get my bank account situation back
because I was scared to even try to do that again.
There needs to be financial literacy. There needs to be
financial coaching for survivors so that whatever point they
need to start doing this, to get that financial foundation,
they need support. They need help, and they need someone who is
going to help them navigate the system, the financial systems,
to get their lives back.
The other thing, though, I would say, not only that, is to
deal with the fact, in therapy, that this was not your fault.
There is so much guilt associated with--you look really bad
when you have bad credit. It is just most people think of--but
when you look at it as somebody who is not going to give me
that chance, they are not going to give me any of the chances
along any lines, and now I cannot even get a bank account or a
credit card.
Chairwoman Waters. Wow. What a nightmare.
Mr. Koch?
Mr. Koch. Yes. Thank you, Madam Chairwoman. It is nice to
meet you.
Chairwoman Waters. Thank you.
Mr. Koch. The Liechtenstein Initiative that I participated
in, and it is still very active, is a public-private
partnership cosponsored by the governments of Australia, the
Netherlands, and Liechtenstein, and co-convened by Muhammad
Yunus, the Nobel Peace Prize winner for micro-credit.
We created what we call the Survivor Inclusion Initiative.
We recognized very early on that survivors, if they are lucky
enough to escape their traffickers, often learn that their
identities have been hijacked, and that can make it impossible
to open a bank account. Their credit histories have been
ruined, and it can be difficult to get a job, difficult to get
an apartment. And, of course, all of that makes them more
vulnerable to re-victimization.
So, we created the Survivor Inclusion Initiative. I brought
together 12 global banks. And in partnership with Polaris, who
brought together some of the larger victim service providers in
the country, we created a mechanism to open simple checking and
savings accounts for [inaudible] survivors. And it is really
very gratifying to be able to report to you that in about a
year's time, we had opened approximately 2,000 bank accounts--
Chairwoman Waters. Wow.
Mr. Koch. --in the U.K., Canada, and the U.S, and that
program continues.
Since I am out of time, I will mention very quickly that
the suggestion that you mentioned about credit repair and
financial literacy is a concrete area where a lot of
stakeholders can make a contribution. There is an opportunity
for credit repair legislation and financial literacy programs.
We are working on those, as well, and would be happy to speak
to the staff to continue that discussion.
Chairwoman Waters. Thank you so very much. I appreciate all
that you have done and the leadership you have provided. And
there is hope, given the kind of reformation that you share
with us, for us to be able to do something about it. And with
Mr. Himes in charge, we are going to get something done.
Thank you very much.
Chairman Himes. The chairwoman yields back.
The gentlewoman from Missouri, Mrs. Wagner, is recognized
for 5 minutes.
Mrs. Wagner. I want to thank Chairman Himes and Ranking
Member French Hill for allowing me to speak at this hearing. I
am subcommittee-crashing at the moment, but I am grateful for
them allowing me to discuss an issue that I am so passionate
about, and talk about the bad actors that can profit and evade
detection through the financial services industry.
I was so proud when Congress passed my Fight Online Sex
Trafficking Act (FOSTA), with the help of many of our witnesses
and so many on this committee, also, on a bipartisan basis. I
can say that FOSTA was also--we led the only successful effort
to amend the increasingly controversial Section 230 of the
Communications Decency Act in the history of Section 230, since
1996. And FOSTA really helps expose and hold accountable
websites that profit from modern day sex slavery.
The financial services industry plays a pivotal role in
combatting trafficking, and these stakeholders must ensure that
their products are not being used to purchase child sexual
abuse and sex trafficking material. I have worked at length
with credit card companies to help them better scrutinize their
payment processing.
And following the tireless campaign of Traffickinghub and
Laila Mickelwait, which precipitated a scathing report from the
New York Times in December on the massive amount of rape and
child sexual abuse materials on Pornhub, as was previously
stated in her testimony, Visa, MasterCard, and Discover
announced that they would no longer process payments to the
website. And just days later, Pornhub removed up to three-
fourths of its library, totaling roughly 10 million videos.
This is a good first step, but more must and can be done.
The coronavirus pandemic has exacerbated the problem of
online enticement to an unprecedented degree, and Laila, who
hails from my home State of Missouri, has done tremendous work
to expose other websites, like OnlyFans, that promote child
sexual abuse. But credit card companies still service OnlyFans
and the site uses mainstream, low-risk, merchant category
codes, despite charging customers for explicit content that
preys on our children. I hope that by shedding light on these
bad, bad actors today that financial services companies will
choose to better scrutinize these sites.
I am also thrilled to welcome Marian Hatcher as a witness
today. Marian was indispensable to my team as we worked to get
FOSTA over the finish line, and she is truly one of the
nation's preeminent public servants.
Ms. Mickelwait, given your experience with Pornhub and
MindGeek, how can financial services companies take proactive
steps to ensure that their services are not being used to
purchase child sexual abuse material online?
Ms. Mickelwait. Yes. Thank you for that question, and thank
you for your work, Mrs. Wagner. I have really appreciated, as
an activist, your passion and dedication to fighting sex
trafficking specifically. So, thank you. Thank you for that.
And I hate to sound like a broken record--often I feel like
I am--but these companies--when you are talking about sex
trafficking, when we are talking about sex acts that are being
uploaded online, we need accountability and oversight on the
nature of those sex acts. Credit card companies should not be
allowing their services to enable transactions if these
companies are not verifying that these are not children who are
being trafficked and raped for profit on their site; and that
these are, in consent and agreement, that these are not women
who are being assaulted, who are being drugged and raped, who
are being trafficked for profit, as well.
Mrs. Wagner. And if I could, Ms. Mickelwait, because I am
running out of time here, how does the mislabeling of merchant
category codes, such as this case with OnlyFans, make it more
difficult for financial services companies to monitor potential
human trafficking and child sexual abuse?
Ms. Mickelwait. Unfortunately, my expertise really has
focused on the big porn sites, like MindGeek sites, and I am
not familiar with those merchant category codes. So,
unfortunately, that is not a question I would be able to
appropriately answer.
Mrs. Wagner. My time has expired. Mr. Chairman, I want to
thank you. This is so, so very important. And I would like to
submit the rest of my questions for the record. And, also, I
would like us to really look into these merchant category codes
and bring it to light through our Financial Services Committee
and through your subcommittee. So, again, thank you for
indulging me and for convening this really important hearing. I
am grateful.
Chairman Himes. The gentlelady's time has expired.
And I would like to thank our witnesses for their very
powerful, very useful, very pragmatic, and constructive
testimony today. I think I speak for all of my colleagues when
I say we are grateful for the opportunity to discuss in a
bipartisan way how we can address one of the uglier aspects of
our society.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
With that, I thank the Members, and I particularly thank
the witnesses, and this hearing is adjourned.
[Whereupon, the hearing was adjourned at 1:46 p.m.]
A P P E N D I X
March 25, 2021
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