Survivors of human trafficking encounter many challenges when trying to start their lives over and regain their confidence and independence.
One key step is setting up their own finances, but the need for standard identification documents in order to open a bank account has long been a big hurdle.
“When somebody exits a human trafficking situation, oftentimes they don’t have their identification. It is one of the ways that traffickers control them,” said Cynthia Bland, founder of non-profit Voice Found, which helps human trafficking and childhood sexual abuse and exploitation survivors. “They use the person’s banking information to commit fraud and rack up debt on their credit cards. There are a lot of moving pieces for somebody as they’re exiting trafficking and they’re putting their life together again.”
Canada’s financial and consumer regulators recently took a major step to reduce this barrier by clarifying that, under the Bank Act, a survivor’s identity can be based on a document from a reliable source if it is also confirmed by a bank customer or individual in the community who is in good standing.
This clarification sets out how organizations such as Voice Found, an Ottawa-based charity, can act as a reliable source for their clients and help them get back on their financial feet faster.
Bank account essential for survivors’ recovery
It can take months for a human trafficking survivor to reobtain an official Canadian identity document, said Bland, or they may not remember or have access to the information needed to fill out the forms.
“We want to be able to establish a bank account as soon as possible. A basic bank account is needed for so much,” she said.
While some may assume that human trafficking does not happen in Canada, statistics show that is unfortunately not the case. Between 2011 and 2021, there were 3,541 police-reported incidents of human trafficking, according to Statistics Canada. During that time, there were 2,688 detected victims of police-reported human trafficking in the country. But actual numbers may be higher, as accurate figures for this activity are difficult to obtain due to the complexity of the crime and the reluctance of survivors and witnesses to come forward.
For those who are able to flee, barriers to accessing the formal financial system, also known as financial exclusion, can contribute to an individual’s continued vulnerability to human trafficking or increased risk of re-exploitation.
Under the Bank Act, consumers can open a retail deposit account if they provide a financial institution with two documents from a reliable source, such as a passport or a utility bill. One of the documents must contain their name and address and the other their name and date of birth.
However, survivors of trafficking often have their identification documents taken from them as a means of control. This makes escaping trafficking or seeking help more difficult. Additionally, many trafficking victims are moved across borders, making it challenging for them to maintain their identification documents.
We want to be able to establish a bank account as soon as possible. A basic bank account is needed for so much.”
Without the identification needed for banking services, victims may have little option but to rely on the informal economy, such as loan sharks or other forms of unregulated lenders, who charge exorbitant interest rates, which can lead to debt traps easily exploited by a trafficker. Lack of ID can also be a significant barrier for survivors to access basic services such as healthcare and education. Removing this barrier to financial inclusion helps reduce the vulnerability of re-exploitation risk and supports efforts to prevent and combat trafficking.
New guidance from regulators
To address this issue, in February, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Financial Consumer Agency of Canada (FCAC) issued new guidance. FCAC’s guidance clarifies that, under the current law, consumers can open an account by providing one document with their name and date of birth from a reliable source if their identity is also confirmed by a customer in good standing with the bank or by an individual of good standing in the local community.
“The outstanding efforts and determination from all partners really showcases how we can be part of a solution that actively facilitates financial inclusion for the survivors of human trafficking while allowing financial institutions to fully comply with existing regulations,” said Sarah Paquet, Director and Chief Executive Officer, Financial Transactions and Reports Analysis Centre of Canada.
“We hope Canada’s ground-breaking approach will reassure and even inspire other countries to do more to support survivors while continuing to identify, target and combat money laundering related to this heinous crime.”
Judith Robertson, Commissioner, Financial Consumer Agency of Canada, said FCAC’s role is to protect financial consumers.
“This includes vulnerable consumers who face barriers and need support to access basic banking services, like opening a bank account,” Robertson said. “FCAC is committed to continue working with its partners and regulated entities to promote financial inclusion so that individuals at risk can fully participate in their community and the economy.”
Pilot through Scotiabank’s Financial Access Program
Financial and economic inclusion is a key priority for Scotiabank, which has been working with non-governmental organizations across Canada such as Voice Found to help survivors of human trafficking through its Financial Access Program. This program includes providing survivors with financial literacy instruction through a specially designated advisor. It also provides human trafficking awareness and sensitivity training for branch employees.
Over the past year, Scotiabank has been working with FINTRAC to explore alternative methods of ID verification and was a key facilitator to FINTRAC/FCAC’s updated guidance. Through Scotiabank’s Financial Access Program, the new ID alternative method was successfully piloted earlier this year.
According to Gilberto Cedolia, Director, AML, Compliance, the approach taken by the Bank was a result of many conversations with NGO partners, which often led to the same topic of lacking ID.
“We are glad to have been able to work closely with FINTRAC and FCAC on this new guidance,” said Cedolia. “This seemingly small change will make a big difference for human trafficking survivors and their recovery, making it easier for them to reclaim their financial identities and rebuild their lives.”
