The internet and digital technology have many benefits and advantages but have also introduced new risks and dangers. With greater internet access, bad minds have quickly seized opportunities to exploit people’s vulnerabilities, especially children. Online human trafficking includes online sexual exploitation of children (OSEC), “the production, for the purpose of online publication or transmission, of visual depictions of the sexual abuse or exploitation of a minor for third party who is not in the physical presence of the victim, in exchange for compensation.”

OSEC was the topic at the recent webinar of the Association of Bank Compliance Officers in the Philippines. It made us aware of the glaring issue of sexual abuse and exploitation. How can banks’ compliance officers and anti-financial crime professionals help expose and mitigate this horrendous crime?  What are the best practices to manage money laundering or terrorist financing risks arising from OSEC coursed through banks and money service businesses?

Nearly 70 million images and videos of child abuse have been reported to the National Center for Missing and Exploited Children. Did you know that the Philippines has been dubbed as the global hotspot for child exploitation material?

Jinky P. Dedumo,  senior assistant state prosecutor of the Inter-Agency Council Against Trafficking, elaborated vulnerabilities to human trafficking risks, specifically reported cases of online sexual abuse and exploitation among children, which leads to trauma and depression, hampering physical and psychological wellbeing. Contributing to the rise of OSEC cases are: extreme poverty; English language proficiency; greater online exposure with inexpensive access to internet; and robust banking and money transfer infrastructure. Possibly, there is also a lack of values as even parents were found to exploit their own children. Demand for OSEC comes mostly from foreigners and tourists. She reported that since 2011, there were 16,250 victims assisted under the Recovery for Traffic Persons under DSWD of which 65% were female and 21% were children.

To allay our fears, Ms. Dedumo said the Philippines has an arsenal of laws aimed at combating OSEC: the Cybercrime Prevention Act of 2012; Expanded Anti-Trafficking in Persons Act of 2012; Anti-Child Pornography Act of 2009; and the Anti-Photo and Video Voyeurism Act of 2009 and Special Protection of Children against Abuse, Exploitation and Discrimination Act.

Caleb Carroll, Internet Crimes against Children specialist from the International Justice Mission, shared relevant insights on the nature, scale and prevalence of OSEC in the country, along with the recommendations for governments, industry and civil society.  He said most traffickers communicated with customers on the surface of the web in exchange of child sexual exploitation material for money, in the majority of cases.

The basic principle of anti-money laundering regulations is to protect the integrity of the financial system and prevent it from being used as a money laundering site for the proceeds of any unlawful activity.  Banks are required to set up systems, internal controls, policies and procedures, and compliance function to specifically identify and mitigate financial crime risks, including human trafficking and OSEC.

Mel Georgie B. Racela, executive cirector of the Anti-Money Laundering Council (AMLC) Secretariat, encourages the use of appropriate and relevant keywords in suspicious transaction reports for better triage, improving existing transaction monitoring systems of covered persons, establishing appropriate measures when implementing know your customer, customer due diligence procedures, being vigilant about online transactions and services, and sharing of information to relevant agencies.  A common red flag indicative of OSEC is when a beneficiary receives remittances from multiple senders, usually male, located mostly in Western and Middle East countries.  Per transaction, these can be as low as P500 to a high of P25,000. with totals from P100,000 to P500,000.

Atty. Mel further stressed the importance of public-private partnership, the ability to exchange information freely, and fostering mutual trust with the regulators through the information sharing protocol (ISP) of the AMLC.  The ISP is a financial intelligence framework designed to enable communication and cooperation between the AMLC and various covered persons, to mitigate and control money laundering, financing of terrorism, and its related unlawful activities in the country.

Philippine National Bank is the first bank in the Philippines to sign the ISP with the AMLC to ensure that adequate systems and controls are in place to mitigate the risk of the Bank being used as a conduit to facilitate financial crime as advised by PNB Compliance Executive Atty. Isagani Cortes.

The growth in OSEC cases is alarming. It is not easy to identify and uncover human trafficking. The internet has made it even tougher.  Let us all help protect our children by bringing down the perpetrators of this crime and ultimately curbing OSEC and human trafficking in the grand scheme of things.

“There can be no keener revelation of a society’s soul than the way in which it treats its children.” — Nelson Mandela


Flor Gozon Tarriela is chairman of the Philippine National Bank and PNB Capital. She is a former Undersecretary of Finance and the first Filipina vice-president of Citibank N.A. She is a trustee of FINEX Foundation, FINEX Academy and an Institute of Corporate Directors fellow.