US Southwest Border Risk Data
The Southwest border of the United States presents a number of challenges to law enforcement due to the smuggling of contraband, arms, drugs, cash, and people. Law enforcement is not alone in the struggle against crime along the Southwest border because financial institutions are advised to monitor for red flags associated with this region.
The Financial Crimes Enforcement Network (FinCEN) issued guidance to financial institutions on September 11, 2014 regarding the red flags of human smuggling and human trafficking. While human trafficking and human smuggling are sometimes used interchangly they are distinct criminal activities.
"Human trafficking centers on exploitation and is generally defined as:
Sex trafficking in which a commercial sex act is induced by force, fraud or coercion, or in which the person induced to perform such act has not attained 18 years of age; or
Recruitment, harboring, transportation, provision or obtaining of a person for labor or services, through the use of force, fraud or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage or slavery."
"Human smuggling centers on transportation and is generally defined as:
Importation of people into the United States involving deliberate evasion of immigration laws. This offense includes bringing illegal aliens into the country, as well as the unlawful transportation and harboring of aliens already in the United States."
The challenge for financial institutions is that the "Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking – Financial Red Flags" advisory issued by FinCEN specifically states:
"to a common beneficiary located in a U.S or Mexican city along the Southwest Border."
It will be fairly easy for the financial institutions to inform their investigation teams that they should be reviewing customers and their transactions more diligently anytime its associated with a US or Mexican city along the Southwest border. However, if the financial institution wanted to identify customers and transactions associated with a US or Mexican city along the Southwest border for reporting, suspicious activity detection scenarios or customer risk rating then they wouldn't be able to do it in an automated fashion unless they built the reference data set required.
Data Derivatives has built the reference data needed incorporate the Southwest border region into an institution's AML program by providing all of the counties, cities and zip codes in both countries along the border.
There are other applications of using this geographic risk data to identify specific customers which present higher-risk to financial institutions. For example, private automated teller machine (ATM) owners who operate close to the Southwest border present additional risks to financial institutions. Additionally, the association to the Southwest border should be based on the address data available as opposed solely relying on questions asked of the customer during the onboarding process.