Thank you, Mr. Chairman, ladies and gentlemen.
I really appreciate the opportunity to present before this committee on the subject of human trafficking in Canada.
By way of background, earlier this month I retired from the Bank of Montreal where I worked from 2013 in anti-money laundering, and previously at the Royal Bank of Canada in a similar role, having come to Canada from the U.K. in 2002 from a career in law enforcement and the military. I'm currently the chief compliance officer of Bitfinex, a digital assets trading company, and I also sit on the board of the Canadian Centre to End Human Trafficking. One of the purposes of the centre is to establish a national hotline for human trafficking reporting in Canada.
I'm going to talk to you about Project Protect. In December 2015, I attended an anti-money laundering conference in Toronto and responded to a call from the floor from a survivor of human trafficking, a wonderful lady, Timea Nagy, who was accompanied by an RCMP officer, Lepa Jankovic. They appealed to the audience of financial institutions, including banks, for assistance in identifying both traffickers and their victims through the patterns of their financial transactions.
I didn't have to think about it for a second; I pledged to help. Fortunately, I sat down next to a representative from Canada's financial intelligence unit, FINTRAC, and he immediately pledged to help. Out of that, Project Protect was born.
Human trafficking in Canada primarily relates to sex trafficking. Approximately 90% of victims are domestic victims, the remainder having come to Canada from abroad, as in Timea's case. Victims are predominantly female, but not always, and they come from all walks of life, not just from disadvantaged communities. Victims are recruited by their traffickers in many ways. Traffickers can be male and female, as can victims. Victims are recruited at shopping malls, online, in schools, in every way you can think of.
Once recruited and forced into the lifestyle, victims work under their traffickers' supervision in motels, hotels, including brand-name hotels, rental apartments in all major Canadian cities, and travel the corridors between those cities regularly. Victims on average, and in my understanding, are expected to earn their traffickers between $1,000 and $1,500 per day, every day. Many traffickers have many victims working for them, so there's a lot of money to be made.
The traffickers need the financial system for many reasons: to be paid by their customers, their clients; to book their travel, their accommodation; and to run their sordid operations. Project Protect launched in January 2016. We brought together in true partnership anti-money laundering, AML, representatives from all the Canadian banks; other financial entities such as money service businesses; law enforcement; payment companies; NGOs; technology companies; professional associations in the banking and hospitality industries; Grant Thornton of Canada; and not least, FINTRAC, Canada's financial intelligence unit.
Financial institutions such as banks are mandated by law to do a couple of things: to identify and report suspicious transactions or attempts as they relate to suspected money laundering and terrorist financing. This includes the proceeds of human trafficking. Banks make these reports to FINTRAC. FINTRAC collates those reports, enhances the intelligence, and shares that information and intelligence with law enforcement.
Until the launch of the project in January 2016, financial institutions were largely unaware, as I was, of the problem and scale of human trafficking in Canada and, indeed, what to look for. In the year prior to launch, institutions had made about 500 suspicious activity reports relating to human trafficking in Canada to FINTRAC. FINTRAC disclosures to law enforcement in the year prior to the launch was small in number, 19 in total. Most of those disclosures were reactive. What that means is a response to a law enforcement inquiry as to whether FINTRAC holds information.
When we started the project, the first thing we did very quickly was to make ourselves aware, educate ourselves by talking to victims and by doing regression analysis on the data that we held that we believed previously may relate to human trafficking. We really started to educate ourselves. Things moved very quickly. Just one month after launch, a total of 500 reports were made to FINTRAC. That is the same total of the previous year, in one month. At the end of 2016, there were over 2,000 reports. At the end of 2017, there were 4,200-something reports made to FINTRAC, and it just keeps increasing.
More importantly, the disclosures made by FINTRAC to law enforcement have similarly increased. Since the project was launched, there's been an increase of approximately 1,400% in reports by FINTRAC to law enforcement. More importantly, these reports are now made proactively. FINTRAC no longer waits for law enforcement to ask if they have any information on this person. FINTRAC proactively discloses to law enforcement information on traffickers and their victims by association that law enforcement may previously not be aware of. That's very, very important.
Action by law enforcement has significantly increased, resulting in arrests, the location of missing people, and the identification of victims. Just by way of example, this year, Toronto police, the largest human trafficking police unit in Canada, successfully took down an international trafficking operation identified through the project involving Portugal, 115 victims, and at least $3 million in the proceeds of crime.
Awareness drives the project, and the members of the project, who are too numerous to mention individually now, act as ambassadors and educate other people. I don't know the number, but it must be in the tens of hundreds or thousands now within Canada that the project has reached and made people aware.
I'd like to share a few lessons learned from the project, which has been running for two and a half years now. I hope this will inform the committee and shape continued action to address the problem of human trafficking in Canada.
Prior to the project, many police forces did not have units dedicated to human trafficking, and in some cases, those that did addressed it reactively. The number of units has certainly increased since the launch of the project, but not all police forces have such units, dedicated units, for human trafficking. Certainly prior to the project, from my observations and knowledge, which is fairly extensive, police officers investigating cases of human trafficking did it myopically. They investigated locally. They would have a local report of human trafficking. They didn't gather the financial intelligence for that case, but they went on the assault of the victim and their trafficker. Had they done so, they would have seen a more holistic view and seen that the trafficker that, for instance, they were looking at in Calgary the week before was in Montreal, Winnipeg, or Toronto, etc.
Financial intelligence provides that holistic view, but I still see silos of effort, well-intended effort, within law enforcement and indeed amongst people in anti-human-trafficking organizations and NGOs, who are competing against each other for funding, effectively, and are still very siloed in their efforts. This is a big observation by me, one I would like to resolve, but it's not going to happen overnight.
In a similar way, I see government funding and local government funding siloed in delivery. Often it is one-off funding, providing an unsustained impact. An organization is funded for six months or a year; after that it's on its own. The good news is, as I've said, that there's certainly been an increase in the number of police forces now having dedicated units and sharing intelligence with each other in FINTRAC. However, a lot more needs to be done, in my opinion. More police forces need to have dedicated units, and they need to work together more collaboratively and proactively with each other, as opposed to in isolation. Police also need funding. I was talking to one police force that would love to do more but just doesn't have the funding to do that.
I would also like to see an increased use of financial intelligence in prosecutions, to take the burden of proof away from the victims, in a way, and focus to a larger extent, with the traffickers, on their proceeds of crime; for instance, charging them with money laundering. I would like to see police officers receive training on the financial aspects of human trafficking. I know that there are courses at the various police colleges, but the banks aren't invited. The banks can certainly educate police officers, and the crown as well, as to what to look for in financial transactions. It's very, very powerful evidence.
Project Protect is a model of public-private partnership. It's been recognized by many organizations—such as the United Nations, the OECD, the Financial Action Task Force, the Egmont Group of financial intelligence units, the Vatican's campaign to end modern slavery—as a best practice in how the public and the private sectors can work together, in this case the regulator and the regulated, the regulator FINTRAC and the banks, etc. It's also been heavily featured in the media, as you may be aware, including CNN, and The Economist actually produced a documentary this year on the project.
There's a lot more that needs to be done. I was stunned to realize that there are no reliable national statistics on human trafficking in Canada. Not all police forces report or are required to report their statistics. That stunned me. Hopefully, the national hotline will go a long way to coordinate an effort, producing data—