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refers to this exclusion as the “the payment processor at onboarding and monitor them afterward, to
exemption,” according to 2014 guidance. prevent illicit activity in your payment system.
Implement an AI solution to help prevent human
This exemption was initially intended to apply to traffickers from using your services.
payments that posed lower illicit finance risk, such as
utility payments. But the payment processor exemption is • Commit to stopping human trafficking: Banks,
now relied upon by larger fintech firms with more diverse payment providers and marketplaces should
and higher risk business models. commit to preventing trafficking through internal
policies, operational and security procedures, and
Even more troubling, this exemption allows payment organizational priorities.
processors to function as unregulated financial intermediates Let’s stop human trafficking
between buyers and sellers, dramatically reducing visibility
into merchant behavior, risk and identity. People tend to avoid talking about human trafficking
because even the idea of such a horrendous crime makes
In practice, this means that banks may have little them uncomfortable. But banks, acquirers and payment
transparency into a merchant’s source of funds, if they providers should remember that they may be unwitting
used a TPPP. The end-to-end payment chain, which hosts to illegal activities due to low visibility of their
includes the originator, intermediaries and ultimate merchants’ underlying business models, content or true
beneficiary of the payment, is not reviewed by a single identity. You have a legal and ethical obligation to ensure
party with a transaction monitoring obligation. traffickers aren’t using your platform to harm people.

Lack of merchant transparency protects traffickers So, let’s bring awareness to this problem and place our
efforts toward stopping these crimes.
Compounding the problem of TPPP risk is the prevalence
of offshore entities. Many human traffickers operate across Maya Shabi, payments & risk specialist at EverC, can be reached via
borders and use foreign geographic locations to manage email at mayas@everc.com or LinkedIn at www.linkedin.com/in/
their operations. It’s not uncommon to see high-risk TPPPs maya-shabi-telaviv. EverC is the world’s first fully automated, AI-driven
onboarding offshore entities that are not fully transparent cross-channel risk management platform that is transforming the inter-
about their primary activities or source of funds. net into a safe and trusted place for ecommerce.

The considerable influx of new merchants over the last
few years has also overloaded marketplaces and TPPPs,
further complicating the screening process. Many players
struggle to comprehensively review new merchants during
onboarding, creating risk for transaction laundering, look-
alike URLs and phishing attacks that aid in trafficking
efforts.

What’s worse, current customer due diligence requirements
allow TPPPs to investigate merchants at surface level only.
This leaves ample room for exploitative business models
to go undiscovered. And the lack of oversight at the
TPPP level means financial institutions are even further
removed from the truth.
What can you do?

Financial and regulatory stakeholders must come together
and strategize a better plan to eliminate human trafficking.
Action items include:
• Support oversight for high-risk merchant processors:
Regulators are increasingly paying attention to the
lax oversight previously enjoyed by high-risk TPPPs.
Support regulations that encourage thorough
merchant verification and transparency.

• Use advanced machine learning technology:
Modern solutions have the ability to identify illegal
transactions or businesses so they can be removed
from your portfolio. They can also assess merchants

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