H.R. 6729 instructs the Secretary of the Treasury to establish a mechanism for non-profit organizations to qualify for safe harbor when sharing specific information with financial institutions that facilitates their duties of customers due diligence and the reporting of suspicious activities relating to human trafficking.
Specifically, the bill grants the Secretary the authority to develop regulations to:
- Register non-profit organizations that meet certain qualifications before qualifying to be protected through this mechanism
- Determine what information may be shared under this protection, which financial institutions may receive information, and how financial institutions may share information received through currently regulated and protected information sharing programs
- Make the processes outlined in the bill coexistent with current information sharing mechanism and use existing guidance or regulations as necessary.
Human trafficking is recognized by Treasury’s Financial Crimes Enforcement Network (FinCEN) as inherently connected to the offense of money laundering by and through the transacting of revenues and profits from the business of exploitation. During the last few years, the connection between human trafficking to the banking industry has received increasing attention, first by the Financial Action Task Force (FATF), and more recently by United Nations Security Council Resolution 2331.
The International Labor Organization (ILO) estimates that approximately $150 billion is generated in profit from human trafficking. Modern labor and sex trafficking are intrinsically linked to private sector business and therefore to the banking system. The financial industry has increasingly sought to reduce their exposure to the problem. There have been significant private sector developments in the efforts to gather better data and intelligence about human trafficking, with support of the private sector. However, lack of liability protections is too great a risk factor for those with information to share to our financial and law enforcement communities, and current methods of providing information through other channels clash against the time sensitive needs of investigators. Without liability protections, outside groups are open to defamation suits by those they report on, pursuit under FOIA, and other potentially dangerous attacks.
While financial institutions are given safe harbor for performing information sharing roles, non-profit organizations—which lack the resources for extensive court proceedings—are unprotected from defamation suits and other actions brought by those who do not want to see their crimes unveiled. Non-profit organizations include small organizations that do not have the ability to defend themselves against the burden of multiple lawsuits from well-funded adversaries. It is in a non-profit organization’s interest to provide the best and most accurate analysis of the available information. Non-profit organizations are often the key sources of intelligence for law enforcement as they are the primary points of contact for reports of abuse. They also play a crucial role in fighting human trafficking and the financial flows that derive from it, and they can ensure that essential information, including on who is profiting from the trafficking, reaches financial institutions and authorities as victims are often fearful of reaching out to the authorities themselves.