[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                        ENDING EXPLOITATION: HOW
                     THE FINANCIAL SYSTEM CAN WORK
                       TO DISMANTLE THE BUSINESS
                          OF HUMAN TRAFFICKING

=======================================================================

                            VIRTUAL HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON NATIONAL SECURITY,

                       INTERNATIONAL DEVELOPMENT

                          AND MONETARY POLICY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 25, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-14
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-441 PDF                  WASHINGTON : 2021                     
          
-------------------------------------------------------------------------------------

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANN WAGNER, Missouri
JIM A. HIMES, Connecticut            ANDY BARR, Kentucky
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey          LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam            WARREN DAVIDSON, Ohio
CINDY AXNE, Iowa                     TED BUDD, North Carolina
SEAN CASTEN, Illinois                DAVID KUSTOFF, Tennessee
AYANNA PRESSLEY, Massachusetts       TREY HOLLINGSWORTH, Indiana
RITCHIE TORRES, New York             ANTHONY GONZALEZ, Ohio
STEPHEN F. LYNCH, Massachusetts      JOHN ROSE, Tennessee
ALMA ADAMS, North Carolina           BRYAN STEIL, Wisconsin
RASHIDA TLAIB, Michigan              LANCE GOODEN, Texas
MADELEINE DEAN, Pennsylvania         WILLIAM TIMMONS, South Carolina
ALEXANDRIA OCASIO-CORTEZ, New York   VAN TAYLOR, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
           Subcommittee on National Security, International 
                    Development and Monetary Policy

                  JIM A. HIMES, Connecticut, Chairman

JOSH GOTTHEIMER, New Jersey          FRENCH HILL, Arkansas, Ranking 
MICHAEL SAN NICOLAS, Guam                Member
RITCHIE TORRES, New York             LEE M. ZELDIN, New York
STEPHEN F. LYNCH, Massachusetts      ROGER WILLIAMS, Texas
MADELEINE DEAN, Pennsylvania         TOM EMMER, Minnesota
ALEXANDRIA OCASIO-CORTEZ, New York   WARREN DAVIDSON, Ohio
JESUS ``CHUY'' GARCIA, Illinois      ANTHONY GONZALEZ, Ohio
JAKE AUCHINCLOSS, Massachusetts      VAN TAYLOR, Texas, Vice Ranking 
                                         Member
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 25, 2021...............................................     1
Appendix:
    March 25, 2021...............................................    33

                               WITNESSES
                        Thursday, March 25, 2021

C.deBaca, Ambassador Luis, Senior Fellow in Modern Slavery, and 
  Visiting Lecturer in Law, Yale University Law School, and 
  former U.S. Ambassador-at-Large to Monitor and Combat 
  Trafficking in Persons.........................................     5
Hatcher, Rev. Dr. Marian, USA Representative, Survivors of 
  Prostitution-Abuse Calling for Enlightenment (SPACE) 
  International..................................................    10
Koch, Barry M., Founder and Owner, Barry M. Koch, PLLC, and 
  Commissioner, Liechtenstein Initiative.........................     8
Mickelwait, Laila, Founder, Traffickinghub Movement, and 
  President, Justice Defense Fund................................    12
Shelley, Louise, Omer L. and Nancy M. Hirst Endowed Chair, George 
  Mason University, and Director, Terrorism, Transnational Crime 
  and Corruption Center (TraCCC).................................     6

                                APPENDIX

Prepared statements:
    C.deBaca, Ambassador Luis....................................    34
    Hatcher, Rev. Dr. Marian.....................................    43
    Koch, Barry M................................................    48
    Mickelwait, Laila............................................    53
    Shelley, Louise..............................................   119

              Additional Material Submitted for the Record

Wagner, Hon. Ann:
    Responses to questions for the record submitted to Rev. Dr. 
      Hatcher....................................................   130
    Responses to questions for the record submitted to Mr. Koch..   132
    Responses to questions for the record submitted to Ms. 
      Mickelwait.................................................   134

 
                      ENDING EXPLOITATION: HOW THE
                      FINANCIAL SYSTEM CAN WORK TO
                         DISMANTLE THE BUSINESS
                          OF HUMAN TRAFFICKING

                              ----------                              


                        Thursday, March 25, 2021

             U.S. House of Representatives,
                 Subcommittee on National Security,
                          International Development
                               and Monetary Policy,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 12:01 p.m., 
via Webex, Hon. Jim A. Himes [chairman of the subcommittee] 
presiding.
    Members present: Representatives Himes, Gottheimer, San 
Nicolas, Torres, Lynch, Dean, Ocasio-Cortez, Garcia of 
Illinois, Auchincloss; Hill, Zeldin, Williams of Texas, Emmer, 
Davidson, Gonzalez of Ohio, and Taylor.
    Ex officio present: Representative Waters.
    Also present: Representative Wagner.
    Chairman Himes. Good afternoon, everybody. Welcome. The 
Subcommittee on National Security, International Development 
and Monetary Policy will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time. Also, without 
objection, members of the full Financial Services Committee who 
are not members of this subcommittee are authorized to 
participate in today's hearing.
    As a reminder, I ask all Members to keep themselves muted 
when they are not being recognized by the Chair. This will 
minimize disturbances while Members are asking questions of our 
witnesses. The staff has been instructed not to mute Members 
except when a Member is not being recognized by the Chair and 
there is inadvertent background noise.
    Members are also reminded that they may only participate in 
one remote proceeding at a time. If you are participating 
today, please keep your camera on. And if you choose to attend 
a different remote proceeding, please turn your camera off.
    If Members wish to be recognized during the hearing, please 
identify yourself by name to facilitate recognition by the 
Chair.
    Just as a reminder--this is our third subcommittee 
hearing--I will be pretty quick on the gavel when the timer has 
expired. I will, of course, allow witnesses to finish, within 
reason, answering questions. But I would ask Members that, if 
they go through their 4 minutes, to conclude their remarks, and 
any questions that are at that 4-minute mark will have to be 
answered in writing for the record.
    Today's hearing is entitled, ``Ending Exploitation: How the 
Financial System Can Work to Dismantle the Business of Human 
Trafficking.''
    I now recognize myself for 4 minutes to give an opening 
statement.
    Trafficking, and especially human trafficking, is a 
societal ill that too many people think is somebody else's 
problem. Even in southwestern Connecticut, we see the brutal 
effects of trafficking, and we are hardly unique in that 
respect.
    In 2019, in the United States, Polaris, which operates the 
National Human Trafficking Hotline, worked on more than 11,500 
situations of human trafficking involving more than 22,000 
survivors, more than 4,000 traffickers, and almost 2,000 
suspicious businesses. And the most shocking fact is that these 
numbers are likely only a very small percentage of what is 
actually going on.
    The worldwide reach of human trafficking is stunning. There 
are estimated to be more than 25 million human trafficking 
victims worldwide, and the business of human trafficking 
generates more than $150 billion in illegal profits per year.
    Today's hearing focuses on how we can harness the power of 
our financial services system to disrupt the business of human 
trafficking, whether by improving the anti-money-laundering 
statutes or by requiring public businesses to look down their 
supply chain to ensure that they are not benefiting from forced 
labor.
    There are a number of areas of improvement that I think 
this subcommittee should consider. We must ensure that the 
financial services firms know what to look for to help identify 
and shut down traffickers and that law enforcement has the best 
tools and resources available.
    We must increase our understanding of the nontraditional 
means of finance that traffickers are using to avoid our 
traditional anti-money-laundering detection systems. That 
includes traditional payment alternatives like prepaid credit 
cards, as well as newer technology like cryptocurrency.
    We must also pay special attention to the survivors of 
human trafficking. In the course of their exploitation, some 
survivors have their identities stolen by their traffickers, 
who then open accounts in their names to further their criminal 
enterprise. As these survivors seek to rebuild, they can find 
themselves in the untenable position of not being able to find 
shelter or open bank accounts, leaving them at risk of being 
victimized again.
    Finally, I take special pleasure in recognizing the 
extremely important role that nonprofits play in this space. 
Grace Farms, which is located in my district, has done 
tremendously important work to combat human trafficking by 
partnering with law enforcement and other nonprofits. That 
includes working with renowned experts, like Ambassador 
C.deBaca, who is with us today, on issues like the use of 
forced labor in the production of construction materials.
    With that, I would like to thank our panel of witnesses, 
whose expertise and experience in their respective fields is 
unparalleled. I sincerely appreciate your assistance in 
tackling these difficult issues.
    The Chair now recognizes the distinguished ranking member 
of the subcommittee, my friend, French Hill, for 5 minutes for 
an opening statement.
    Mr. Hill. Thank you, Mr. Chairman. Thank you for convening 
this hearing, and I thank the witnesses for joining us today, 
and for your expertise.
    A year ago, we began this anti-trafficking initiative when 
we held our first hearing. The plan then was to have hearings 
every quarter or so to dive deeper into specific types of 
trafficking. Then, COVID hit, and derailed our well-crafted 
plan, but I am pleased that we are resuming our previously 
scheduled programming today.
    To that end, I have said I would like to get these hearings 
to resume in person, Mr. Chairman. I know you share my view. 
Given the country is reopening, I think it is imperative for 
Congress to return to normal operations and serve as an example 
for our nation.
    Mr. Chairman, a year later, trafficking remains a huge 
concern for our country. Since I have been in Congress, I have 
traveled to the southwest border 6 times to study those 
critical policy needs. President Biden's recent executive 
actions that counter the Trump Administration's immigration 
reforms and border measures have increased human trafficking 
concerns.
    The unaccompanied minors arriving at our southwest border, 
if they are not already, are potential victims of human 
trafficking. So far, our U.S. Customs and Border Protection 
(CBP) has already apprehended 11,000 of these minors in 
February. According to the CBP, the cartels are making $14 
million a day. Let me repeat that: $14 million a day, or $400 
million in February alone, in trafficking the most vulnerable 
to our open border.
    Statistics tell us that 75 percent of these kids are 
between the ages of 15 and 17 and are highly vulnerable to 
smugglers and sexual assault. Many end up in debt bondage, 
working off their illegal crossing fee by forced labor, sex, or 
both.
    The Biden Administration inherited a secure border, and 
since eliminating many of the Trump Administration decisions, 
the U.S. has seen a 168 percent increase in border crossings 
and apprehensions for unaccompanied minors, and 63 percent for 
families.
    Likewise, in Africa's largest country, Nigeria, my concern 
is growing about the deteriorating human rights situation. I 
recently had a call with Dr. Khataza Gondwe with the Christian 
Solidarity Worldwide organization to discuss the intersection 
of trafficking and terrorism in Africa.
    And sadly, as we know, human trafficking happens anywhere, 
all over our nation, in our backyards. In my home State this 
past January, 13 people were arrested for a sex trafficking 
operation in northeast Arkansas. In this local case, 
fortunately, due to coordinated and cooperative law 
enforcement, and, I must say, well-funded law enforcement at 
the local, State, and Federal level, three victims were 
rescued.
    We need to ensure that we have policies in place to 
facilitate that kind of synergy and coordinated effort to cross 
jurisdictions and agencies. This is exactly what my good 
friend, Ann Wagner, has advocated for during her time in 
Congress, including in her bill, the Homeland Security 
Investigations Victim Assistance Act, which would help victims 
of trafficking access the resources they need, while also 
assisting law enforcement in apprehending their traffickers. I 
am pleased that she is waived into this hearing today and will 
lend her knowledge, interest, and expertise.
    Homeland Security Investigator Special Agent Jere Miles 
said it best in that recent Arkansas raid: ``When we 
collaborate with local law enforcement and community partners, 
we increase our reach and our impact.'' I could not agree more 
with this sentiment.
    I look forward to the expertise shared today, and I yield 
back the balance of my time.
    Chairman Himes. Thank you, Mr. Hill. I do share your hope 
that we can do this in person. I actually did a little due 
diligence in talking to the attending physician, and I was told 
that our Member vaccination rate is hovering around 75 percent. 
It probably doesn't quite get us there, so I would urge all 
members of the subcommittee who share mine and the ranking 
member's hopes that we can get together in person to urge our 
colleagues to get vaccinated so that we can leave this 
technology behind.
    Moving on, today, we welcome the testimony of our 
distinguished witnesses. By way of very quick introduction, 
first, Ambassador Luis C.deBaca, Senior Fellow in Modern 
Slavery, and Visiting Lecturer in Law at Yale University Law 
School here in the State of Connecticut. He is the former 
Ambassador-at-Large to Monitor and Combat Trafficking in 
Persons.
    Second, Dr. Louise Shelley, the Omer L. and Nancy M. Hirst 
Endowed Chair at George Mason University, and the Director of 
the Terrorism, Transnational Crime and Corruption Center, known 
as TraCCC.
    Third, Mr. Barry M. Koch, is the Founder and Owner of Barry 
M. Koch, PLLC, and Commissioner of the Liechtenstein 
Initiative.
    Fourth, we have Rev. Dr. Marian Hatcher, the USA 
Representative for SPACE International.
    And finally, we have Ms. Laila Mickelwait, Founder of 
Traffickinghub, and President and Founder of the Justice 
Defense Fund.
    Witnesses, thank you all for being here. You are reminded 
that your oral testimony will be limited to 5 minutes. You 
should be able to see a timer on your screen that will indicate 
how much time you have left, and a chime will go off at the end 
of your time. I would ask that you be mindful of the timer, and 
quickly wrap up your testimony if you hear the chime, so that 
we can be respectful of both the witnesses' and the committee 
members' time. And without objection, your written statements 
will be made a part of the record.
    Ambassador C.deBaca, you are now recognized for 5 minutes 
to give an oral presentation of your testimony.

STATEMENT OF AMBASSADOR LUIS C.deBACA, SENIOR FELLOW IN MODERN 
  SLAVERY, AND VISITING LECTURER IN LAW, YALE UNIVERSITY LAW 
  SCHOOL, AND FORMER U.S. AMBASSADOR-AT-LARGE TO MONITOR AND 
                 COMBAT TRAFFICKING IN PERSONS

    Ambassador C.deBaca. Thank you, Mr. Chairman, Ranking 
Member Hill, and members of the committee.
    Our Constitution, laws, and treaty obligations protect 
people from forced labor, forced prostitution, and the 
commercial sexual exploitation of children, but millions remain 
in servitude with a financial impact of at least $150 billion. 
That is a grave national security threat and a human rights 
imperative. It is a victim services challenge, and it poses 
both risks and opportunities for the financial system. Risks, 
because traffickers and profiteers use the financial system to 
move money, collect payments, and commit other crimes, 
sometimes even terrorism. So, too, lack of access to the 
financial system leads to self-collateralization. The resulting 
recruitment fees, transportation costs, and deductions for food 
and clothing create a peonage situation even before work 
starts.
    The abusive company-store employer-based financial system 
of the past is alive and well, and financial fraud and identity 
theft by traffickers further victimizes those upon whom they 
prey, because the financial system in which this crime is 
poorly understood exacerbates the victimization through credit 
scoring and other means, just as the lack of understanding has 
kept survivors out of transitional job opportunities because of 
criminal records or the inability to meet licensing standards.
    Initial discussions and preliminary responses have largely 
been around the retail level and primarily focused on sex 
trafficking, but the risk is much broader and touches on 
aspects such as commercial banking and construction financing, 
as I think my fellow witnesses will address. One note on 
construction financing, that multi-trillion-dollar industry is 
riddled with forced labor, and timber and mining operations 
often drive demand for sex trafficking.
    In October, Grace Farms' Design for Freedom report 
identified a number of at-risk building materials in addition 
to the abuse that we have seen on job sites. A good next step 
in advancing that effort would be to address construction 
financing so the trafficking risks are not borne solely by 
builders, workers, and vulnerable communities.
    Indeed, financial intelligence around construction 
materials supply chains can bring opportunities for disruption, 
innovation, and profit. Major financing often comes through the 
international financial institutions of multilateral 
development banks, but they have not taken an active role. The 
U.S. International Development Finance Corporation's project 
language prohibiting forced labor might be a good model for 
their activities.
    There are opportunities for partnership: the financial 
sector can help restore survivors and support service 
organizations; banks and consumer credit ratings should 
aggressively develop credit repair tools; and firms can provide 
hiring pathways for restoration and partner with service 
providers and survivors to obtain financial intelligence.
    But none of these things will be possible without 
leadership from the United States Government, which is why 
there is a need for agency-wide coordination at Treasury to 
move beyond the admirable, but informal, engagement and 
innovation of motivated staff. Imagine secretarial 
prioritization and trafficking-specific authorities, work 
responsibilities, and budgets, not to mention relationships 
with organized labor, human rights groups, service providers, 
and survivors themselves. So, too, clarifying and intensifying 
human rights sanction authorities and activities would provide 
a strong tool and ensure harmonization with our allies.
    Last fall, interagency recommendations were crafted with 
input from nongovernmental organizations (NGOs) and survivors. 
They represented the kind of bipartisan consensus that 
characterizes this fight, and they include: stepped-up 
financial intelligence gathering and dissemination; expansion 
and intensification of efforts at the Department of the 
Treasury; harnessing the power of the international financial 
institutions (IFIs) and the multilateral development banks 
(MDBs); creating innovative partnerships in support of 
survivors, as well to protect the integrity of the system; 
facilitating credit repair and restoration; and recognizing the 
need for mechanisms to protect NGOs and service providers who 
share important financial information and intelligence.
    A number of bills that track these recommendations have 
been introduced or are in the discussion stage and would have a 
real impact.
    Another worthy prospect in discussion is to build upon the 
success of the Foreign Corrupt Practices Act (FCPA) for 
trafficking and human rights abuses.
    Any of these recommended activities and potential laws 
would add to our ability to investigate and prosecute, to 
protect and restore, and to prevent this grave human rights 
crime. Such efforts would facilitate partnerships within the 
financial system, with allied nations, and most importantly, 
the most vulnerable and affected communities. And they would 
harness the power of the financial system and regulatory bodies 
alike in service to that most American of ideals: the promise 
of freedom.
    Thank you.
    [The prepared statement of Ambassador C.deBaca can be found 
on page 34 of the appendix.]
    Chairman Himes. Thank you, Ambassador.
    Dr. Shelley, you are now recognized for 5 minutes to give 
an oral presentation of your testimony.

STATEMENT OF LOUISE SHELLEY, OMER L. AND NANCY M. HIRST ENDOWED 
   CHAIR, GEORGE MASON UNIVERSITY, AND DIRECTOR, TERRORISM, 
       TRANSNATIONAL CRIME AND CORRUPTION CENTER (TRACCC)

    Ms. Shelley. Thank you, and it is a great honor to be with 
you today.
    Human trafficking networks are entrepreneurial and 
flexible, and, as my written testimony reveals, human 
trafficking networks often converge with other illicit 
activities. In the United States, we have a variety of 
networks, both domestic and international, and their money is 
laundered both in the U.S. and abroad.
    We have networks that are very small, with a single 
trafficker and case facilitators; or, as in a recent Federal 
case that produced an indictment in 2018, involved 30,000 
clients, 58 cities, and 350,000 online advertisements. This 
reflects the growth of human trafficking in the online 
environment, as Laila Mickelwait will discuss.
    I also agree with Ambassador deBaca that much more needs to 
be done with labor trafficking, and that often involves 
corporate actors as we see in the fishing, agriculture, and 
production sector.
    Human traffickers in documented cases that I mention have 
used every type of money laundering available: underground 
banking; bulk cash smuggling; money laundering into real 
estate; establishment of live businesses as vehicles for money 
laundering, trade-based money laundering; misuse of credit 
cards, including prepaid credit cards; money transfer 
businesses; wire transfers; banks; and cryptocurrencies. And, 
in many cases, this illicit activity of human trafficking 
converges with the legitimate economy.
    What policies do we need to address human trafficking? 
First of all, we need to implement and realize the beneficial 
ownership law that has just been passed, and it needs to be 
carefully and comprehensively implemented. Traffickers can now 
hide behind shell companies and anonymous ownership. The 
largest detected network of human traffickers that I just 
mentioned involved massage parlors in cities across the U.S., 
Canada, and Australia, and the vast majority of massage parlors 
hide their owners' identity. Therefore, we need to implement 
the Corporate Transparency Act and establish a national 
beneficial ownership directory.
    Second, we need to focus on cryptocurrency, which is being 
used to finance human trafficking and many other forms of 
illicit activity. Greater financial oversight is needed of this 
fast-growing financial instrument, and similarly, cooperation 
in the sharing of information between government agencies and 
the private sector is needed to track and analyze criminal 
transactions, as I indicate in my statement.
    Third, we need to follow the money. There needs to be a 
much more central attention to the role of money in 
investigations of human trafficking. This is difficult because 
there are relatively small numbers of suspicious activity 
reports in the FinCEN database, and they are often not used to 
full advantage, as was seen in the Epstein case. Training and 
awareness must be raised in the banking community to not only 
increase SARs reporting, but also to make use of these reported 
suspicious transactions that are presently underutilized.
    Fourth, we must focus on supply chains for human 
trafficking by looking at transport systems, travel agencies, 
hotels, rental apartments, rideshare services, and short-term 
rental apartments. According to the Human Trafficking 
Institute's analysis of Federal trafficking cases in recent 
years, over 80 percent of Federal cases of sex trafficking 
involved exploitation at hotels and motels.
    Fifth, we need to enhance regulation and reporting 
requirements of online businesses to vet customers and report 
suspicious transactions. More needs to be done by companies, 
such as Uber and Airbnb, in monitoring data for suspicious 
patterns of financial transactions and how their businesses 
inadvertently support human trafficking networks. The role of 
online businesses in human trafficking is broader than these 
companies addressed by the FOSTA-SESTA legislation.
    And sixth, we need to address trade-based money laundering 
(TBML). This underacknowledged form of money laundering is key 
to the movement of the proceeds of human trafficking into the 
global financial system as many of the loopholes in the rest of 
the system are shut. Our understanding of TBML requires greater 
analysis as to how it is occurring in human trafficking, and 
the red flags associated with it need to be much more carefully 
conceived. This will have an enormous impact not only in 
countering human trafficking, but other forms of the illicit 
economy, such as the Fentanyl trade and the environmental crime 
with which it sometimes intersects. This is also especially 
relevant to the fishing industry, in which larger numbers of 
individuals are subject to labor exploitation.
    Thank you very much.
    [The prepared statement of Dr. Shelley can be found on page 
119 of the appendix.]
    Chairman Himes. Thank you, Dr. Shelley.
    Mr. Koch, you are now recognized for 5 minutes.

 STATEMENT OF BARRY M. KOCH, FOUNDER AND OWNER, BARRY M. KOCH, 
        PLLC, AND COMMISSIONER, LIECHTENSTEIN INITIATIVE

    Mr. Koch. Thank you, Mr. Chairman, Ranking Member Hill, and 
members of the subcommittee. Thank you for the invitation to 
participate in today's hearing.
    My name is Barry Koch. I am a law professor and a private 
attorney with a consulting practice in which I provide expert 
witness and advisory services in money laundering cases and 
financial crimes risk management. I am also a co-founder of the 
United States and European Banks Alliance Against Human 
Trafficking, a former commissioner on the Financial Sector 
Commission, and I was one of a team of compliance professionals 
that developed the first quantitative model in the banking 
industry to monitor transactional activity for red flags 
indicative of labor trafficking and sex trafficking. More 
recently, I was an assistant district attorney here in New York 
County.
    I would like to offer one additional perspective before I 
offer five concrete recommendations for the subcommittee to 
consider. We are all in emphatic agreement about the moral 
imperatives to end human trafficking, but I would like to offer 
an additional practical reason for increasing our anti-
trafficking efforts, which is that trafficking on a macro level 
is economically inefficient. It depresses innovation. It fuels 
corruption and the flow of illicit funds in the financial 
system. It deprives governments of tax revenues, and it 
disrupts the efficient deployment of human capital. It 
privatizes criminal profits while socializing the costs.
    So, here are my five recommendations for the subcommittee 
to consider. First, increase the use of financial records and 
financial data to initiate and strengthen prosecutions. Using 
financial records and financial data has been effective in 
identifying victims and perpetrators, improving coercion, which 
is a required element in a criminal charge, in corroborating 
witness testimony, and in serving as the basis for asset 
forfeitures.
    Further, if witnesses are reluctant to testify because of 
the threat of violence against them or family members, or the 
risk of being deported, or even because of the fear of being 
prosecuted themselves, financial records can be used to pursue 
other serious criminal charges that may not require testimony. 
For example, prosecutors may bring a case against a trafficker 
for tax evasion, structuring, and money laundering where the 
trafficker's tax returns report minimal income and assets, yet 
the financial records refute those tax returns by illustrating 
a lavish lifestyle. Serious crimes that may be related to the 
trafficking, such as bank fraud, kidnapping, extortion, 
identity theft, and immigration fraud can also form the basis 
for asset forfeiture, which is a very powerful tool to disrupt 
a trafficking business.
    Second, strengthen the use of sanction regimes. There is 
already a precedent for the U.S. to use economic sanctions to 
designate and punish human rights violators and to deny them 
access to the U.S. financial system. Executive Orders have in 
the past identified serious and flagrant human rights abuses as 
threats to the national security, foreign policy, and the 
economy of the United States. And, in this context, the 
government has previously sanctioned transnational criminal 
organizations, companies, and individuals for migrant 
smuggling, human trafficking, and child prostitution. These 
sanctions can be designed to be limited and surgical, and can 
be used to target industries that are notorious for using child 
labor and trafficked labor in their supply chains. In 
evaluating this recommendation, it is important to note that 
the U.S. financial sector already has a well-developed 
operational infrastructure to ensure immediate and sustainable 
compliance.
    Third, strengthen the risk assessment process employed by 
financial institutions as a critical element of their anti-
money-laundering programs. There are material weaknesses in the 
current regulatory and operational framework, and here are a 
few practical ways to address them.
    One, require that the risk of human trafficking be 
specifically included in annual anti-money-laundering (AML) 
risk assessments. Very few large banks do this, and virtually 
none of the mid-sized and small banks or credit unions or money 
transmitters and check cashers include the risk of human 
trafficking as part of their annual AML risk assessment.
    Two, require financial institutions to evaluate human 
trafficking as a funding source for terrorist organizations. 
Although the current regulatory scheme treats human trafficking 
as a reportable predicate crime for money laundering, few, if 
any, financial institutions do that. Many national governments, 
including our own, have overlooked this issue, focusing only on 
the money laundering risks.
    There are published cases that report instances where the 
Islamic State has conducted online slave auctions in 
territories that it controlled. And, more recently, in fact we 
saw it just in yesterday's Wall Street Journal, cases involving 
Boko Haram, their multiple kidnappings of school children, some 
of whom are ransomed, while others are forced into marrying 
their captors, while still others are conscripted into serving 
as child soldiers.
    I am aware of the time, so I will simply refer the members 
to my written statement, which goes into additional 
recommendations, including how to address the cryptocurrency 
risks and how to take a more victim-centric approach to helping 
traffickers who are caught up in the criminal justice system. 
Thank you.
    [The prepared statement of Mr. Koch can be found on page 48 
of the appendix.]
    Chairman Himes. Thank you, Mr. Koch.
    Rev. Dr. Hatcher, you are now recognized for 5 minutes.

STATEMENT OF REV. DR. MARIAN HATCHER, POLICY ANALYST AND VICTIM 
     ADVOCATE, SURVIVORS OF PROSTITUTION-ABUSE CALLING FOR 
              ENLIGHTENMENT (SPACE) INTERNATIONAL

    Rev. Hatcher. Thank you. Greetings, Chairman Himes, Ranking 
Member Hill, Representatives from Illinois, and the members of 
the subcommittee. It is an honor and a privilege to share my 
personal and professional experience and knowledge in an area 
which adversely impacts citizens of this great country every 
day.
    Human trafficking relies on a business model which feeds on 
the vulnerable, benefitting only the predatory. It results in 
violence, substandard living conditions, loss of hope, and loss 
of life.
    Growing up, I had a loving and caring family. However, 
molestation by a relative at age 7 forever changed the 
trajectory of my life. While I went on to achieve formal 
education, corporate success, marriages, and motherhood, the 
trauma of that molestation would awaken under negative 
circumstances. Those circumstances included a volatile 
combination of domestic violence, drugs, and associated trauma.
    I was guilt-ridden and ashamed of allowing my first abuser, 
but not the last, to hurt me, assault my mother, put a gun to 
the head of my oldest son, and terrorize my other children. 
When I ran from the danger at home, I embraced a numbness 
provided by crack cocaine and alcohol. To feed that habit, 
prostitution became a way of life. Eventually, I was 
trafficked. Soon, it became impossible to imagine returning to 
my loved ones, whom I abandoned. My tribe, parents, ex-husband, 
aunts, and other in-laws took care of my children and each 
other until God brought me home.
    My exploitation eventually led to my arrest, not an 
uncommon outcome for so many trafficking survivors. However, I 
benefitted from jail-based treatment. And even though arrest 
should never be a tool for connecting survivors with services, 
having access to those services paved the way to reuniting me 
with my family after nearly 2 years, and I found a second 
chance.
    My second chance resulted in a career, a purpose-filled 
next chapter at the Cook County, Illinois, Sheriff's Office, 
where I progressed through several roles and most recently 
served as policy analyst and victim advocate. Currently, I am 
on medical leave due to progressive multiple sclerosis.
    From 2005 to 2019, my purpose and responsibilities became 
addressing the unaddressed issues of victims who lived, 
suffered, and often died because of experiences like mine. 
Seeing how many people, especially women of color, were ruined 
by systems of prostitution and systemic oppression planted in 
me a fiery passion and a focus on gender-based violence. This 
dedication was surpassed only by my commitment to hold 
predators accountable.
    I am here to present my lived experience, both as a victim 
of human trafficking and as a professional champion of law 
enforcement tactics that center on restorative justice and 
accountability. I am not speaking in any official capacity. 
Instead, I am here as a result of my lived and professional 
expertise, which informs this issue in several roles, including 
as a U.S. representative for SPACE International, which means 
Survivors of Prostitution-Abuse Calling for Enlightenment--we 
represent 10 countries--as a member of Shared Hope 
International's Just Response Council, and as a policy 
consultant at the National Center on Sexual Exploitation, and 
demand evolution.
    Based on my experience interviewing hundreds of victims and 
watching scores of Federal, State, and local trafficking cases 
unfold, I am going to share three high-level observations 
regarding the business model of human trafficking. My written 
testimony provides a more detailed assessment of these issues.
    First, the commercial sex trade is a billion-dollar 
industry, as we stated, that causes massive, long-term physical 
and psychological damage, disproportionately impacting women 
and youth of color. Yet, almost no money reaches victims, even 
those identified as victims of human trafficking. The need for 
expanded services for trafficking victims is great, and the 
lack of investment in services can be addressed in part by 
redirecting funds from convicted exploiters in order to help 
fund specialized programs that can address persistent scarcity 
of appropriate services.
    Second, technology can be a tool for investigation and 
prosecution by following the money, which also reduces reliance 
on the testimony of victims, who face a host of potentially re-
traumatizing experiences in the criminal justice process. Using 
technology to follow the money is what King County, Seattle, 
did in its investigation and prosecution of the Review Board, a 
website set up by sex buyers to promote access to prostituted 
individuals. By focusing enforcement efforts on the market 
driver, the sex buyers, rather than the individuals being 
bought and sold on a website, they are able to dramatically 
impact the market for exploitation in their jurisdiction.
    Third, despite the current popularity of the mantra, ``sex 
work is work,'' my 15 years of experience also tells me that 
most women and youth do not want to be selling access to their 
bodies. Even those who are not trafficked are selling out of 
duress, such as addiction, homelessness, mental duress, or a 
combination of these factors. Most want out of the life. Most 
encounter major obstacles to achieving financial stability, 
including barriers to accessing basic banking services, such as 
bank accounts and credit cards. The resulting lack of resources 
often leads to re-exploitation as survivors feel they have no 
option other than returning to the commercial sex industry.
    I want to thank the subcommittee for the opportunity to 
testify today, and I look forward to answering your questions 
about these critically important issues.
    [The prepared statement of Rev. Dr. Hatcher can be found on 
page 43 of the appendix.]
    Chairman Himes. Thank you very much, Rev. Dr. Hatcher, for 
that testimony.
    Ms. Mickelwait, you are now recognized for 5 minutes to 
give an oral presentation of your testimony.

    STATEMENT OF LAILA MICKELWAIT, FOUNDER, TRAFFICKINGHUB 
         MOVEMENT, AND PRESIDENT, JUSTICE DEFENSE FUND

    Ms. Mickelwait. Thank you very much.
    Prior to this year, Pornhub was the tenth most trafficked 
website in the world, with 42 billion visits per year. The site 
boasted 6.8 million videos uploaded per year; that would take 
169 years to watch. Pornhub is owned by MindGeek, an 
international pornography conglomerate that has obtained a 
monopoly on the porn industry.
    As the New York Times put it, MindGeek is a porn titan. 
MindGeek is also what I call a mega sex trafficker, in that its 
sites are infested with highly monetized commercial crime scene 
footage of user-generated child sexual abuse, rape, assault, 
and other forms of non-consensual pornographic content.
    Every video on Pornhub is commercial. In fact, the totality 
of videos on the MindGeek sites generate hundreds of millions 
of dollars per year. The company knowingly has enabled and 
profited from mass amounts of filmed sex acts induced by force, 
fraud, or coercion, and the commercial sexual abuse of 
children.
    Unfortunately, Pornhub is not alone. There is an entire big 
porn industry operating similar user-generated porn sites. For 
example, MindGeek's biggest rival, WGCZ, which has had a recent 
class action lawsuit filed against it on behalf of trafficked 
minors, boasts 200 million daily visitors and 6 billion daily 
ad impressions on its sites. Like Pornhub, these websites are 
set up for exploitation, allowing any user with a cell phone 
camera to anonymously upload sex acts with only an email 
address. This lack of oversight and accountability is 
intentional on the part of these sites because the unlimited 
ability to upload content by any user in the world is the 
business model that generates the most profit.
    For Pornhub and its largest competitors, content is king. 
The more content that is uploaded, the more traffic is driven 
to the site, and the more profit is generated from advertising, 
premium memberships, and the sale of user data. In fact, 50 
percent of Pornhub's profit is generated via advertising. 
Because profits are the crux of the issue, financial services 
actors that facilitate and benefit from the exchange of money 
play a crucial role when it comes to enabling or disabling the 
crime of sex trafficking on such sites.
    For example, after 2 million people from 192 countries had 
signed the petition to hold Pornhub accountable, over 300 
organizations called for the site to be shut down. Victims 
publically came forward. Lawmakers in the U.S. and abroad 
called for criminal investigations. Grassroots protests were 
being organized around the world, and hundreds of media 
articles were bringing attention to the sexual crime on the 
site. Pornhub still refused to acknowledge the problem. Even 
until October 2020, Pornhub told the media that suggestions 
that children were being exploited on the site were conspiracy 
theories.
    However, in December, a groundbreaking New York Times 
expose put pressure on the major card companies to stop 
enabling the abuse. MasterCard, Visa, and Discover quickly 
responded by confirming illegal content on the site, disabling 
the use of their cards, and, in under 24 hours, the 10th most 
trafficked website in the world deleted 80 percent of its 
content, totaling 10 million videos.
    Not only was this a dramatic admission of guilt on the part 
of Pornhub, but it was also a demonstration of the power and 
influence that financial institutions have in regulating even 
the largest websites in the world. This leverage should have 
been utilized a long time before it was, not only because it 
was the right thing to do, but because knowing that trafficking 
was being facilitated with their services and not taking action 
is illegal. According to the Trafficking Victims Protection 
Act, knowingly benefitting from a trafficking venture is 
prohibited.
    So, what are the solutions? First, we urgently need the 
antiquated law, 18 U.S. Code Sec. 2257, to be amended to hold 
websites distributing user-generated pornography responsible 
for age verification and record-keeping. This law has been in 
place for decades to help prevent child abuse from 
proliferating in the porn industry, but it must be updated to 
keep up with the times and hold the major online porn 
distributors accountable for the content from which they 
profit.
    Second, we need mandatory, reliable age and consent 
verification procedures mandated for every sex act uploaded 
online. Reintroducing and passing the bipartisan, Stop Internet 
Sexual Exploitation Act, should be a priority. Laws regarding 
the disclosure of beneficial owners of companies who own such 
sites is also an important accountability measure. In the case 
of MindGeek, its executives and owners have intentionally 
hidden their identities in order to escape scrutiny. Even now, 
we do not know who is ultimately behind the company.
    Lastly, enforcement of laws concerning the mandatory 
reporting of child sexual abuse material must be improved to 
ensure that companies like MindGeek, which has offices, 
servers, and substantial consumers in the United States, are 
held accountable for failing to report known child sexual abuse 
material (CSAM) as legally required. Recent testimony and 
publically available data show that despite widespread presence 
of child exploitation on Pornhub, the company made no reports 
to Canadian or American authorities for over a decade. This is 
unacceptable. We need accountability. These actions would go a 
long way in the realm of sex trafficking prevention in the 
digital age.
    Thank you for the opportunity to testify today.
    [The prepared statement of Ms. Mickelwait can be found on 
page 53 of the appendix.]
    Chairman Himes. Thank you, Ms. Mickelwait, and thank you to 
all of our witnesses, for your powerful and valuable testimony.
    I now recognize myself for 5 minutes for questions.
    Ambassador C.deBaca, I would like to start with you. Both 
you and Dr. Shelley mentioned supply chains, that Congress is 
spending a lot of time thinking about supply chains in the 
context of cybersecurity. I wonder if you could give us some 
guidance? And Dr. Shelley, since you mentioned it too, I will 
turn to you next.
    What actually should the Congress be doing with respect to 
mandating, requiring, encouraging, or asking for disclosure 
that would improve the visibility into supply chains?
    Ambassador C.deBaca. Thank you, Mr. Chairman. I think that 
one of the most important things is to remove the current 
situation in which most companies who are looking at their 
supply chains are either already good actors, or are doing it 
solely on a voluntary basis, so that they can then back off of 
as convenient.
    And we saw that just in the last 24 hours with Inditex, the 
parent company of Zara, who has evidently taken their zero 
tolerance for forced labor policy off of their website due to 
Chinese pressure over the Weibo situation. I think that tells 
us right there that, even in something that has been as well-
documented, even in something that has been as well organized 
as the cotton campaign and the garment work over the last 
decade, if it is left to companies to do voluntarily, they will 
do it when convenient. Or, they will do it through greenwashing 
and ineffective multi-stakeholder initiatives.
    So, I think that we need to, just as what we have seen with 
the United Kingdom's mandatory disclosures and the Australian 
Modern Slavery Act that followed it, building on the example of 
the California Supply Chain Transparency Act, I think it is 
time for a United States Supply Chain Transparency Act at the 
national level, which does not make disclosure or doing work in 
your supply chain at all voluntary on the part of firms.
    There is a lot that one can do by looking at the Federal 
procurement regulations, which again are bipartisan responses 
from both the Obama and Trump Administrations. President Trump 
and his folks took the Obama Executive Order and helped to put 
teeth into it, and I think it just shows that this is a 
consensus issue, that we can come together.
    Chairman Himes. Thank you, Ambassador.
    Dr. Shelley, let me ask you to chime in if you would like 
to. I do have one remaining question for Mr. Koch, though, so 
let me ask you to be brief, if you would?
    Ms. Shelley. Certainly. I certainly endorse what Ambassador 
deBaca says about supply chain transparency and how we need 
that on the national level and not just in California. But I 
think there also needs to be much more of an enforcement 
mechanism and not just voluntary declarations because it has 
not been as effective as needed.
    I have been working for the last 2 years on an NSF grant 
looking at illicit supply chains in regards to human 
trafficking, and what is evident from this research is that 
many of the key notes intersect with the legitimate economy. 
So, as we are looking at, and as was just talked about, online 
activity and advertisements, so, that intersects with the 
internet. Then, we have transport of victims, which often 
occurs through commercial vehicles or often with ridesharing. 
And then, the victims, of course, who are exploited by the 
traffickers are taken often to hotels and motels, which takes 
them and places them in another commercial environment, which 
is a legitimate part of our economy.
    So, what we need to be doing is focusing much more on the 
intersection of this illicit phenomenon that is resulting with 
so much tragedy and how it is being facilitated and supported 
by legitimate and large-scale companies in the United States. 
Because many of the hotels are large chains, and they have, 
until there started to be suits from victims, not paid enough 
attention to what was going on in their hotels and establishing 
policies. So, this is not something that is existing totally in 
the illicit and dark economy.
    Chairman Himes. Thank you, Dr. Shelley.
    Mr. Koch, I only have 9 seconds left, so I am going to ask 
you to answer this question in written form. I am very 
interested to know whether there is alternative financial 
information that our current anti-money-laundering efforts do 
not capture that would be valuable in this effort. Again, I am 
out of time, so I cannot ask you to answer. But I would also 
invite the other witnesses, if they have thoughts about data 
that we might capture that would be helpful, to also respond 
subsequent to this hearing.
    With that, I recognize the distinguished ranking member, 
Mr. Hill, for 5 minutes for questions.
    Mr. Hill. Thank you, Mr. Chairman, and again, thanks for 
the hearing. And what an excellent panel. Everybody on our 
subcommittee is learning a great deal and we appreciate the 
heartfelt, detailed, and recommended ideas in your testimony.
    Speaker Pelosi, whenever she gives an interview, always 
makes a statement--and I am going to paraphrase here. It is 
always, for her, she says, about the children. And so, this is 
certainly a major challenge when one thinks about human 
trafficking both on the border, domestically, and in other 
countries as a part of the transnational crime movement. I know 
this is a desponding topic for so many, and Speaker Pelosi 
often mentions it is always about the children. I hope that we 
on this subcommittee think about that, that it is in fact often 
about our youngest, most vulnerable people.
    I mentioned in my opening statement about the encounters on 
the border, 100,000 alone in February, the highest in 7 years. 
One report I read said the highest in 15 years. So, this is a 
key challenge for us right now in the country. It is definitely 
a crisis. Jeh Johnson, who was our former Secretary of Homeland 
Security under President Obama, said that anytime there were 
more than 1,000 encounters a day, it was a bad number. So, I 
hope that puts in perspective the challenge that we have.
    Ambassador C.deBaca, when an unaccompanied minor crosses 
the border into the United States, tell us how Health and Human 
Services and other agencies are responsible for the child, 
screening potential sponsors to ensure a child is not put into 
a harmful situation or a trafficking situation here in our 
country.
    Ambassador C.deBaca. As a former Federal prosecutor, my 
direct responsibility was investigating and prosecuting cases. 
But my understanding as to what HHS does with unaccompanied 
alien children is that within a short timeframe--I think 48 
hours--they are tasked with identifying sponsors, preferably 
family members, whom the children can then go ahead and travel 
to join. There was a consensus in the 2008 Trafficking Victims 
Protection Act Reauthorization that the prior practice of 
releasing the unaccompanied alien minors back across the border 
was simply creating a revolving door and was creating an awful 
lot of sexual assault and other mistreatment on the other side 
of the Mexican border.
    Mr. French. Thank you very much. I agree. I think it is a 
huge challenge. And right now, those held in unaccompanied 
conditions are--70 percent are not being met with any kind of 
resolution within 72 hours.
    Mr. Chairman, I would like to ask unaimous consent to 
insert in the record a study that was released by the Senate 
Permanent Subcommittee on Investigations on Protecting 
Unaccompanied Alien Children from Trafficking and Other Abuses.
    Chairman Himes. Without objection, it is so ordered.
    Mr. French. Thank you very much.
    I was talking to my friend Melissa Dawson today. She runs 
the Centers for Youth and Family here in Arkansas, and they do 
an outstanding job helping our kids who are victims of 
trafficking here in the State. I visited that process, and I 
admire her so much. She talks about the issue of technology 
increasing trafficking, and she also talked about her concern 
that she cannot see cases get prosecuted because they are 
complex around--to track the transactions, and she is concerned 
about Bitcoin and cash apps.
    So, Mr. Koch, is there a way that cash apps and other 
currencies, such as Bitcoin transactions, could be monitored 
more effectively for suspicious activity?
    Mr. Koch. Yes, absolutely. And I, again, would refer the 
subcommittee to my written statement where I address this, but 
let me explain the context in which I address it because it is 
a very important question.
    It is the context of public-private partnerships, which the 
Congress did cover in the Anti-Money Laundering Act of 2020. 
There are some not-for-profit startups and there are other 
companies that are doing some brilliant, cutting-edge work in 
looking at cryptocurrency analysis, in looking at the dark web 
for specifically this purpose, and they are sharing the 
information with law enforcement and with the financial sector. 
And this information provides actionable intelligence for 
investigations. More should be done, but the public-private 
partnership theme, which I know your subcommittee is concerned 
with, as well, is one very effective way to go in that 
direction.
    Mr. French. Thank you for that. I will have some additional 
questions for the record, and Mr. Chairman, I yield back.
    Chairman Himes. The gentleman's time has expired.
    The gentleman from New Jersey, Mr. Gottheimer, is 
recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Chairman Himes and Ranking 
Member Hill, for calling this very important hearing today, and 
to all of our witnesses for being here.
    Many of the same online tools that we all use to keep in 
touch with loved ones or conduct business during this pandemic, 
as we all know, are increasingly being utilized by those who 
wish to do harm to our nation. This harm is not limited solely 
to political extremist hate and propaganda by groups like Hamas 
and Proud Boys, but also comes as illicit activities, such as 
groups that utilize social media to advertise or recruit 
potential human trafficking victims. This, to me, is 
unacceptable. Tech companies and social media platforms should 
be doing everything they can to stop the proliferation of 
harmful content.
    Ms. Mickelwait, we see this time and time again, as 
websites drag their feet to remove illicit content and fail to 
report it to the authorities. Should tech companies be held to 
a higher liability standard when it comes to allowing this 
material to stay online? And what role could the financial 
services industry play to help stop illicit actors from 
profiting from the content generated by human trafficking?
    Ms. Mickelwait. Thank you for that question. I think what 
is important here is to highlight the harm that these recorded 
crime scene videos do to these victims. It is one thing for a 
victim to be subject to rape, to be subject to trafficking. But 
what I have heard from countless victims, whom I have spoken 
with about their abuse online, is that it is the 
immortalization of their trauma--they call it that--because 
they go on with the knowledge that their abuse, that their 
trauma, the worst moments of their life, will live on in the 
digital space long after they are gone. And they live with that 
terrorizing knowledge.
    I think that there is this high, high level of 
responsibility for sites like Pornhub, and like MindGeek-owned 
sites like XVIDEOS, xHamster, and others that are distributing 
sex acts, often containing minors, containing trafficked women, 
containing those who have not given their consent to be 
uploaded and distributed online. And I think that we must hold 
them accountable. We need to see age and consent verification 
when a sex act is uploaded online. I think that would go a long 
way in the area of prevention, like I mentioned.
    Mr. Gottheimer. Do you think the tech companies should be 
held to a higher liability in general? Should they be held more 
responsible for this?
    Ms. Mickelwait. I think that they should be held 
responsible as any company that would knowingly benefit from a 
trafficking venture, would knowingly benefit from the 
distribution of child sexual abuse material. We have those laws 
in place, and I think that they need to be applied.
    Mr. Gottheimer. Thank you. If I can turn to the Ambassador 
now, do you believe that the current financial intelligence 
system we have in place is effective at providing the proper 
data to law enforcement to track and combat human trafficking 
through the financial system?
    Ambassador C.deBaca. I do not. And I think that one of the 
things that we have seen is that it has been a slow uptake of 
the SARs checkbox that has been added. It took a lot of staff 
work and it took a lot of dedicated folks in both the banking 
industry and over at Treasury to get that done. But it really 
needs, I think, to get disseminated out to the banks.
    And, then, back at the Department of Justice and in the 
U.S. Attorneys' offices, the folks over in the Asset Forfeiture 
and Money Laundering Sections are working more closely with the 
folks over in the criminal section of the Civil Rights Division 
so that we can incorporate in following the money.
    Mr. Gottheimer. And just to follow up on that, Ambassador, 
should there be a coordinator at Treasury working with the 
Secretary? How would you provide this agency-wide coordination 
to help stop, human trafficking? What steps should we take 
specifically?
    Ambassador C.deBaca. One of the things that we saw during 
my time as the coordinator for the U.S. Government was that 
when a Secretary's office brought the anti-trafficking fight 
into the highest level of the agency, things started getting 
done. We saw that at Transportation. We saw it at the 
Department of Education. We even saw it at USDA. So, I think 
that it would be a salutary thing for the Department of the 
Treasury to make that move, as well.
    Mr. Gottheimer. Thank you. And it is something I have been 
working with Treasury on to make sure that we are using all of 
our coordination and to stand up to the social media websites 
and cryptocurrencies and stay one step ahead here, which I 
think is key. And we will continue to work together to make 
sure that happens so that we are well-coordinated and our 
arsenals combat this threat.
    So, thank you again to our witnesses for your time today. I 
yield back.
    Chairman Himes. The gentleman yields back. The gentleman 
from Texas, Mr. Williams, is recognized for 5 minutes.
    Mr. Williams of Texas. Thank you, Mr. Chairman, and thank 
you, Mr. Ranking Member.
    Regardless of whether my Democratic colleagues want to 
recognize what everyone else can see in plain sight, there is a 
crisis at our southern border. There were 100,000 illegal 
immigrants detained in the month of February alone, and a large 
number of these were children and family units coming across 
our border.
    I am extremely concerned that as our border patrol agents 
are being overwhelmed by all these people, it is making it 
easier for human traffickers to slip through the cracks and 
expand this horrible practice in this country.
    Governor Greg Abbott, from my great State of Texas, summed 
up the issue well in a letter he sent to the Biden 
Administration earlier this week about what we are seeing on 
the ground. He wrote, ``Recent decisions by your administration 
are emboldening dangerous cartels, smugglers, and human 
traffickers to ramp up their criminal operations. In many 
cases, these criminals entice unaccompanied minors into 
inhumane conditions and expose them to abuse and terror.'' And 
I, along with many of my fellow Texans, share the exact 
concerns of our Governor.
    So, Ambassador, what additional steps should HHS be taking 
to ensure that children apprehended at the border are not being 
trafficked?
    Ambassador C.deBaca. I think there areat a couple of 
things. First of all, I think it is not just HHS, but DHS 
itself, as you said. And I think putting all of the onus on our 
border patrol personnel takes one of the most important tools 
out of the tool chest, and that is the folks over at Homeland 
Security Investigations (HSI).
    What we know about human trafficking is that it doesn't 
manifest itself in transit. It is something that typically is 
only known once people have gotten to their destination and are 
put into forced labor or sex trafficking. We are talking about 
an interior enforcement priority that HSI, I think, is good at, 
but always lacks the efforts, the money, the budget, the 
agents, et cetera, for it.
    I think there are the kind of things that we heard from 
Ranking Member Hill about the situation up in Arkansas, with 
HSI agents being able to work hand in glove with their local 
counterparts. I think that is going to be really important.
    As far as the HHS is concerned, there is good leadership 
over there in the counter-trafficking office, and I think that 
the procedures, as I understand it, are being worked on. I am 
not part of that effort. But I would say that typically, one 
wants to have as much information as possible about the 
families and placements that those children are traveling to 
join.
    Mr. Williams of Texas. Okay. Thank you. I do have other 
questions. But before I move on, I just need to reiterate one 
more time that we have a serious problem at our southern 
border, and so far, we have not seen the leadership that is 
needed out of the White House to get the situation under 
control.
    Mr. Koch, we have been told that the current Currency 
Transaction Report (CTR) and Suspicious Activity Report (SAR) 
thresholds are so low that it makes finding bad actors 
extremely difficult. We have heard it described as trying to 
find a needle in a haystack. And since there is so much 
information to sift through, how can we make the use of these 
suspicious transaction reports more useful for law enforcement?
    Mr. Koch. It should be part of a larger approach within the 
financial industry to deny the traffickers access to the 
system. Much of what has been discussed over the past few 
minutes has been reactive. And that is not bad, but it is 
different from preventive. And what is missing from the 
regulatory environment is that the global banking system is not 
doing risk assessments for trafficked labor in supply chains of 
their corporate customers, and that is a gaping hole. It is 
probably much larger than the SARs that talk about credit card 
fraud and identity theft and CTRs that report $11,000 in 
currency transactions. So, I think you have to combine the two.
    But as far as the actual thresholds, my view is that the 
CTR threshold is the correct threshold, and I would take 
guidance from law enforcement there on changing the number. It 
has been discussed many times over the years and they have 
consistently said, don't change the number.
    I would take the same view with the SARs. It is not the 
number that matters. It is the narrative and the sophistication 
of the transactional analysis that I would focus on.
    Mr. Williams of Texas. Okay. Thank you. And, Mr. Chairman, 
I yield back.
    Chairman Himes. The gentleman yields back.
    The gentleman from New York, Mr. Torres, is recognized for 
5 minutes.
    Mr. Torres. Thank you, Mr. Chairman.
    The 115th Congress, for the first time ever, established an 
exception to Section 230. The exception allows tech companies 
to be held civilly liable for sexually exploitive content.
    I have a question for Ms. Mickelwait. To what extent has 
the law been effective at diminishing the online market for 
sexually exploitive content? Because I gather from your 
testimony that online platforms remain widespread facilitators 
of sex trafficking, even with the threat of civil liability.
    Ms. Mickelwait. One thing that we are seeing now is the 
utilization of that law with regard to MindGeek, the specific 
case. Since December, there have been multiple lawsuits filed 
against the company, utilizing that carve-out. We are seeing 
two class action lawsuits on behalf of trafficked minors: one 
filed in California; and another filed in Alabama. And we also 
have a filing of 40 women who were trafficked on Pornhub, who 
are also utilizing that law. So, yes, we are seeing that this 
was an important accountability measure and that it is being 
utilized and, so, I think it is a positive thing.
    Mr. Torres. And you rightly pointed out that the Nicholas 
Kristof expose, ``The Children of Pornhub,'' demonstrates that 
public scrutiny can create a powerful incentive for companies 
to do the right thing. Is there a role for the Federal 
Government to play in monitoring websites for sexually 
exploitive content and calling out companies that continue to 
facilitate sex trafficking?
    Ms. Mickelwait. I believe that there is a role for the 
government to play in accountability for these sites. My 
recommendations are not just for monitoring, but really, the 
enforcement of laws, the updating of laws that we have already 
on the books. For example, I mentioned 18 U.S Code Sec. 2257. 
This was a law that was adopted decades ago, and the problem 
with the law is that it is antiquated. It is old. It was 
implemented to prevent child sexual abuse, rape, and 
trafficking in the pornography industry back when DVDs and VHS 
tapes and magazines were the primary distribution method for 
this content. It needs to be updated, and I think that would go 
a long way in helping to prevent child exploitation, and 
trafficking on these big porn sites.
    But also, like I mentioned, the Stop Internet Sexual 
Exploitation Act, which focuses on age verification and consent 
verification for sex acts that are being uploaded online. I 
think, again, that is a very, very critical and important 
priority that we must focus on to help prevent the distribution 
of this kind of content in the digital age.
    Mr. Torres. You made a powerful point about the 
immortalization of trauma, and I am wondering, how do we best 
prevent that? Should porn sites be more like YouTube, which 
does not allow for downloading? How do we best prevent the 
immortalization of trauma as you described earlier?
    Ms. Mickelwait. First, I want to point out that up until 
the New York Times piece pointed out that there was this 
download button on every single video--and think about that, 7 
million videos uploaded per year. And like I said, it would 
take 169 years to watch this content. And the company designed 
the site in such a way that they enabled a download button on 
every single video, even though they were not verifying age and 
consent for upload. And we have records that show that they 
only had less than 10 moderators per shift monitoring this 
content on the site.
    This is kind of a business model. The way that these sites 
are set up is to have this unlimited ability to upload. Again, 
because content is king, because traffic is what drives 
profits. I think that, obviously, we need to disable the 
ability for those downloads.
    But even if you disable the ability for downloads, people 
in this day and age can screen-record anything online and then 
they can redistribute it again and again and again and again 
for the rest of time, once it is uploaded initially onto any of 
these sites. So, I think the preventative measure is, before 
upload, these sex acts need to be vetted. There needs to be 
accountability before upload, before these acts get onto these 
sites. We need those kinds of preventative measures in place.
    Mr. Torres. And then I have a quick question for the 
Ambassador. We all know China's role in the labor trafficking 
of Uyghur Muslims. Are there any other nation states, any 
particularly egregious actors that are known to aid and abet 
human trafficking, and have we imposed sanctions on those 
countries? And that will be my final question for the 
Ambassador.
    Ambassador C.deBaca. Yes. There are both in state-sponsored 
forced labor, such as the North Korean labor export scheme, 
which sends enslaved North Koreans into other countries, 
especially in industrial and manufacturing. But we have also 
seen sanctions on countries for mistreatment of trafficking 
victims, such as Iran and others.
    I think one of the things that, as we are looking at--
    Chairman Himes. Ambassador, I'm sorry. The gentleman's time 
has expired. I need you to wrap it up quickly.
    Ambassador C.deBaca. Yes. Cotton is not simply a Uyghur 
problem. It also is a problem in the former central Asian 
republics.
    Chairman Himes. If you would like to elaborate on that 
answer, you can do so in writing for the record. The 
gentleman's time has expired.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you, Mr. Chairman, and thanks to our 
ranking memberand to our witnesses. I just appreciate that we 
are having this hearing on an important topic.
    I want to also thank my colleague, Ann Wagner, who has 
really done a lot of work on this in my time on the committee 
now and my time in Congress. It has been rewarding to be part 
of cosponsoring some of the bills she has worked on over time.
    So, thanks for the work that you all are devoting to really 
ending this practice, or at least making the people who 
participate in it accountable. It is a black market practice in 
the United States, sex trafficking, human trafficking, and we 
have a very large black market.
    Ambassador C.deBaca, what is the makeup of the demand 
component of this? You talked about interior enforcement when 
Congressman Williams was talking about it. How do we get after 
the demand? What is the profile of the demand and how do we 
focus on them?
    Ambassador C.deBaca. I think that one of the things that we 
see is there are two types of demand. There is demand for 
commercial sex and demand for cheaply-made goods that are kind 
of derivative demand that traffickers then use enslavement and 
abuse to meet. And then, there is the other demand, the even 
more pernicious demand, which is specific to child commercial 
sexual exploitation, almost a pedophilic demand for images or 
sexual contact with minors.
    And I think we have to address both of those demands. If we 
only focus on the most heinous, I think that we are allowing 
these industries to flourish in those cracks.
    Mr. Davidson. I want to focus on where this happens. And 
then, I guess I am wondering, are immigrants and minorities 
more exploited as victims of human trafficking? Does that seem 
to fit the profile in the supply chain?
    Ambassador C.deBaca. This week in my class at Yale, we are 
just getting to the 1970s, and that is kind of the pivot point 
when the African-American community stops being the dominant 
group in which enslavement, modern slavery, is happening in the 
domestic service or agricultural farm work. In both of those 
sectors, we have seen a replacement of that previously excluded 
and vulnerable community by a predominantly immigrant 
community.
    In sex trafficking, I think we still see folks from the 
minority communities, and, I think most troubling, the 
indigenous community. The tribes are seeing an awful lot of 
problems that are tied into a number of the other social ills 
that plague the tribes.
    Mr. Davidson. Thank you for that. And I think it just 
highlights how important it is, the interconnectedness here, 
with fixing our broken immigration system. It creates a massive 
black market. People are exploited on it tremendously. And we 
are a welcoming country for people who do it legally, but the 
broken nature of the legal system in the United States, coupled 
with the massive appeal of our country as a true land of 
opportunity, creates a big desire to be here even if it means 
being here illegally.
    And I think the interior enforcement should not be looked 
at as hostile; it should be looked at as compassionate. We have 
to end these practices. We have to secure our borders. It is a 
component of national security, and it is a component to end 
human suffering and exploitation, or at least diminish it here 
in the United States.
    I think one of the areas that we should look at--and it is 
noticed in this bill. It is not so much a focus here on the 
Securities and Exchange Commission. Congressman Torres talked 
about Uyghurs and Uyghur exploitation in China. And, as a 
component of our foreign policy, I think it has been a great 
legacy for the United States to deal with human rights, and 
China is clearly abusing their Uyghur population in virtually 
every way that you could imagine.
    I think that the bill that we noticed, talking about how to 
turn the SEC into sort of a law enforcement mechanism for other 
good causes, is wrong-headed. We should look at sanctions, and 
I would love to work with Congressman Torres on that, and 
others in the committee, because stronger things with the tools 
that we already have using the Office of Foreign Assets Control 
(OFAC) would be more useful than trying to go passively and 
just go after publically-traded companies and their supply 
chains.
    So, thanks for the work. I look forward to collaboration 
with members of the committee and with some of our witnesses if 
you have any ideas. So, with that, I yield back.
    Chairman Himes. The gentleman yields back.
    The gentlewoman from Pennsylvania, Ms. Dean, is recognized 
for 5 minutes.
    Ms. Dean. Thank you, Mr. Chairman, and thank you for 
bringing together such an amazing panel of experts.
    I want to ask a couple of quick questions.
    Rev. Hatcher, how can we more effectively support survivors 
of human trafficking, both their physical and mental health, 
but also their financial well-being?
    Rev. Hatcher. That is a great question. First of all, we 
need to turn the pain into purpose and the exploitation into 
economic empowerment. Those two things together give survivors 
a chance. There is that lack of hope. If you have no hope, 
there is no chance of trying to become a productive member of 
society. And we are talking about lives who are utilized for 
constant pounding and sexual activity that numbs them to what 
is really going on in the world, what really is good about 
being alive and being a human being and being a person who is 
able to contribute to the world. And to have an enriched way of 
looking at things, to have dignity and respect. So, the most 
important thing is to get victims and survivors to a point 
where they want to live, where they want to be a part of 
society, where they feel they can contribute to society.
    I was blessed to be in an environment at the Cook County 
Sheriff's Office that believed in rehabilitation. The domestic 
violence sent me to that really awful place. I was missing for 
2 years. But I ended up in this safe place, if you happen to be 
jailed, but this safe place that gave me services. Okay. Then, 
my 17 years in the corporate sector brought that together.
    But I am not the normal profile when it comes down to 
prostituted and exploited individuals. Most of them have not 
had an opportunity to be contributing members of society 
before, to be able to know that there are norms that do not 
include their body being sold to meet their basic needs.
    So, we need to make sure that there is no long-term impact, 
like criminalization. For me, I was in a forward-thinking 
environment and was hired with a felony conviction that was not 
until 13 years later granted executive clemency by Governor 
Rauner. Think about that. The Sheriff's office said, ``We 
believe in rehabilitation, it is okay, we know that you have 
things to contribute.''
    We have to not criminalize survivors. We have to, when they 
are criminalized, provide vacatur opportunities. And from the 
very beginning, there has to be a plan. There has to be a plan 
to provide, meet that person where they are at, walk side by 
side with them to know exactly what they need. And it takes a 
team. It takes a multidisciplinary team.
    Ms. Dean. Thank you, and I apologize. I could listen to you 
give us more information, but I only have so many minutes, and 
I want to try to get one other question in that sort of 
follows. But thank you for what you just said and what you 
highlighted. It somewhat follows what Mr. Himes was asking when 
his time stopped.
    Mr. Koch, in your testimony, one of your recommendations 
was for financial institutions to require the risk of human 
trafficking to be included on the annual money laundering 
assessments, which is something few currently do. What would 
that assessment look like? Can you explain how it would benefit 
and ultimately reduce trafficking?
    Mr. Koch. The benefit would be that it would keep 
trafficking out of that institution. It would make it more 
difficult for large projects and large corporations that have 
trafficked labor and child labor in their supply chains to 
access financial products.
    What it would look like--there is actually a model. It is 
an interactive model that is in my written statement that we 
will not have time to go through today. But what it would look 
like is that the banks would evaluate. If you take a very large 
construction project, for example, look at the construction of 
the football stadium in Qatar in connection with the upcoming 
World Cup soccer tournament.
    If you believe that there is trafficked labor in the 
construction supply chains, why hasn't the very sophisticated 
credit analysis that all the big western banks have gone 
through when they decided to open up lines of credit in the 
hundreds of billions of dollars, why hasn't that analysis 
included an analysis about whether the construction crews have 
trafficked labor? If the analysis expands to that, you can get 
representations and warranties and covenants in your credit 
facilities so that you can address this problem. And if the 
borrowers don't address it, they will be denied credit.
    Ms. Dean. Super. Thank you, Mr. Chairman. I yield back.
    Mr. Chairman. The gentlelady's time is expired.
    The gentleman from Ohio, Mr. Gonzalez, is recognized for 5 
minutes.
    Mr. Gonzalez of Ohio. Thank you, Chairman Himes and Ranking 
Member Hill, for holding this important and timely hearing. And 
thank you to our panel of witnesses. It has been incredibly 
important to hear your testimonies and your insights into this 
critical issue.
    Online child exploitation is one of the worst issues facing 
our society. Last year, the National Center for Missing and 
Exploited Children received more than 21.7 million reports of 
child exploitation, representing a 28 percent increase over 
2019, as folks have been stuck inside during this pandemic. 
Congress must pay increased attention and provide the requisite 
funding, but also make the appropriate changes to the law.
    On that note, Ms. Mickelwait, I want to start with you and 
pick up where Mr. Torres left off on the immortalization 
component. I think, frankly, the suggestions that you made in 
your testimony are common sense. I look forward to working with 
anybody who wants to work on this to make sure that we get 
these implemented. I cannot see why we would not want reliable 
agent consent verification procedures for any image of a sex 
act uploaded online.
    But on the immortalization piece, what recourse do victims 
have, if any, to get the content taken down? Are they able to 
use the tools of the law to get it taken down? Or how would 
they go about doing that?
    Ms. Mickelwait. This is a huge, huge problem, because even 
when they are able to get this content taken down, what we find 
again and again is that it gets re-uploaded again and again and 
again. And so, these victims live in a state of kind of 
obsession with trying to find their abuse material online.
    They live with the fear that they cannot even go out 
sometimes to the grocery store or apply for a job. They believe 
that somebody has seen the videos of their exploitation and 
abuse. Often, it causes them to be suicidal, to have suicidal 
tendencies and thoughts, severe depression, all of these 
things. Once these videos get online, these images, it is 
almost impossible to guarantee that they won't be uploaded 
again.
    There are some measures that are implemented on these sites 
for victims to be able to remove content, but often, they are 
ignored. We have many cases, and a case, for example, of 
Pornhub--
    Mr. Gonzalez of Ohio. Can I reclaim my time? I'm sorry, Ms. 
Mickelwait, just for a second. I saw Dr. Hatcher nodding her 
head. I just want to let her into the conversation. Does that 
resonate with you, the story that Ms. Mickelwait was just 
telling?
    Rev. Hatcher. Absolutely. I agree with everything that she 
is saying. It causes extreme re-traumatization, and it is like 
it becomes their job to try to find where their images are, 
where these videos are. And that constant angst and anxiety of, 
has someone seen this? And in a lot of cases, they have. So, it 
is a constant sense of re-traumatization.
    Mr. Gonzalez of Ohio. Thank you for that.
    Mr. Koch, I want to switch to you. One of the biggest 
barriers to effective tracking of money involved in human 
trafficking is the widespread use of aging technology by banks 
as they monitor transactions for signs of money laundering. As 
you may know, banks are required by law to monitor the 
activity. Most monitoring systems are rules-based, so programs 
with an if-then scenario. So, if certain things occur, then 
transactions will be flagged.
    Today, it strikes me we could and probably should be using 
AI-based technology, like machine learning, to recognize 
suspicious patterns. One, do you agree with my assessment? But 
then, two, what would need to happen to convert the industry to 
more high-tech tools?
    Mr. Koch. First of all, yes, I agree with your assessment, 
although the industry has progressed quite a lot in the last 
few years from the traditional rules-based. Many of the large 
banks are using machine learning and AI. The smaller banks and 
the credit unions are not, and those are serious 
vulnerabilities. And there are ways to address those, as well, 
with some of the public-private partnerships. But absolutely, 
your fundamental point about using technology is critical.
    And I would add something to that. In addition to machine 
learning and AI, in addition to the rules-based, there is the 
typologies-based, and that comes from information sharing 
between law enforcement and the private sector. When you do a 
post-mortem after you bring down a trafficking ring and you 
understand how they access the system, how they move their 
money, how they stole identities and the like, you can develop 
automated rules that are based on those typologies to prevent 
and detect those instances from happening again. So, I would do 
all three.
    Mr. Gonzalez of Ohio. Thank you, and I yield back.
    Chairman Himes. The gentleman's time has expired. The 
gentleman from Illinois, Mr. Garcia, is recognized for 5 
minutes.
    Mr. Garcia of Illinois. Thank you, Chairman Himes and 
Ranking Member Hill, for holding this important hearing. And 
thanks to our witnesses for joining us today, especially Rev. 
Hatcher, who hails from Cook County here in the Chicagoland 
area.
    I arrived in this country from Mexico when I was a child. 
My father came to work under the Bracero program, a government 
program that brought Mexican workers to the United States. 
Since then, I have seen our global economy change, and I have 
seen the evolution of legal and illegal ways to supply labor to 
employers. And I have seen that human rights and labor rights 
always go together. It is almost impossible for someone with no 
labor rights to speak up about trafficking, and it is hard for 
a person without status to speak up about labor exploitation.
    So, I want to direct my first question to Ambassador 
deBaca. When some people hear about the horrors of human 
trafficking, their first instinct is to close the borders and 
shut off immigration. Does that make sense to you? Or does 
criminalizing immigration just make trafficked workers more 
vulnerable to corrupt employers and traffickers?
    Ambassador C.deBaca. I think what we have seen, Mr. Garcia, 
is exactly I think what you are noticing, which is that the 
more securitized the border is, the more there becomes a need 
to go to the gray economy and find facilitators and smugglers 
to get into that country. And without having sane and sensible 
guest worker programs with protections, without having family 
unification, without having alternative means of immigration, 
it is not simply that the people will come. We should not put 
this on the workers. It is that the farmers want the work. The 
people who own the companies want the workers.
    Frankly, it was the North Carolina agriculture community 
that pushed for an African guest worker program before the 
Civil War because they thought that it would bring down the 
price of slaves. It was the folks who were building the 
railroads who pushed to bring in Chinese folks, whom they later 
excluded. So, I think that we need to look at it not simply as 
an issue of the foreign worker who wants to come to the United 
States and get a job, but thinking about how the American 
employers can actually get the folks that they need to do the 
work. There are plenty of people who are more than willing to 
come here and contribute and do that work.
    Mr. Garcia of Illinois. Thank you for sharing that insight. 
Ambassador, in your testimony, you mentioned the construction 
industry and how we need to hold traffickers accountable, not 
only at the work sites, but for the financing and insurance of 
construction projects, as well. Do you think there is a way 
that workers and labor organizations, like trade unions or 
worker centers, could be helpful in identifying exploitation 
and holding these groups higher up the chain accountable?
    Ambassador C.deBaca. Yes, sir. We certainly saw that in 
agriculture with the Coalition of Immokalee Workers, who 
started out in tomatoes and pickles and I think oranges, many 
of whom were survivors of a notorious coup leader in the 1990s 
in his slavery ring.
    But what we have seen is a worker center and a construction 
union in the Twin Cities, in Minneapolis, who have taken that 
approach, the Immokalee approach, and started to work to clean 
up the construction sites and the construction industry there 
in Minnesota. And I think that when we actually bring together 
the worker power, we can set a lot of standards that then good 
employers can look to as far as how they govern their supply 
chains and their worksites.
    Mr. Garcia of Illinois. Thank you very much.
    And again, I appreciate all of the fantastic witnesses for 
shedding light on exploitation and trafficking of humans. Thank 
you so much.
    Chairman Himes. The gentleman yields back.
    The gentleman from Texas, Mr. Taylor, is recognized for 5 
minutes.
    Mr. Taylor. Thank you, Chairman Himes. I appreciate it. And 
Ranking Member Hill, I just wanted to echo your encouragement 
for, if not in-person hearings, hybrid hearings. I know we 
safely did those last year and hoped they would come back. I 
think it really facilitates our ability to interact with each 
other in person.
    And I will just further echo Ranking Member Hill's comments 
about the crisis on our southern border. A few days ago, I was 
at an emergency intake site in Dallas, Texas, where a facility 
that had zero--did not even have a signed lease last week, hit 
capacity at 2,300 children as a result of what officials there 
called the greatest crisis they have ever seen. And it is very 
worrisome, and I know that it is going to result, 
unfortunately, in more human trafficking as a result of just 
not having the personnel to secure our border.
    Shifting over to this topic, I wanted to build on my 
colleague, Representative Dean's, questions about helping 
survivors to take the next step. Something I worked on when I 
was in the Texas legislature was legislation to help victims of 
human trafficking to be able to seal their records. Many of 
them, while they were trafficked, had been convicted of crimes 
while they were being trafficked, and those criminal 
convictions would preclude them from really living full and 
productive lives.
    Rev. Hatcher, I was going to ask you--if I may be so bold 
as to ask you--did you incur a conviction while you were being 
trafficked or did you know others who had gone through that?
    Rev. Hatcher. Yes. So, that is my story. Thank you for 
asking that question. I was arrested and I was actually sent 
to--my traffickers sent me out to get drugs to bring back to 
where the sex acts took place for enormous amounts of time. All 
it was, was the selling of sex, and the use of drugs was 24-7. 
So, I was sent out to do so. And I was arrested.
    I mentioned that I received executive clemency from then-
Governor Rauner for a conviction for drugs. But the application 
for clemency was built on the fact that I was a trafficking 
victim and that I was under duress and sent out to do their 
bidding, which is the typical story, sir. We are the ones who 
end up with the convictions and the difficulties in getting 
back in the mainstream society.
    Mr. Taylor. Sure. I know that in Texas, we were able to 
pass laws to help victims like yourself who were convicted of 
crimes while they were being trafficked to be able to seal 
their criminal records. Did they have a similar law for the 
crimes you were convicted of in the State of Illinois?
    Rev. Hatcher. The reason why my only recourse was to 
receive executive clemency and expungement by the Governor of 
Illinois was because in Illinois, the law is more narrow. And 
in Illinois, there is a law--if the convictions had been 
related to prostitution or human trafficking, everything would 
have been able to be vacated. But because it was a drug charge, 
a drug charge was not in that, so there were certain prior 
crimes that did not qualify.
    Mr. Taylor. Yes. And I will say, I was very surprised when 
I came to Congress and reviewed--there is no sealing law in 
Federal statute today. A sentence to a Federal penitentiary 
should not be a life sentence. And I think if we want to help 
people get their lives back, we need to work on that.
    I actually signed on as an original lead with my colleague 
from New York, Hakeem Jeffries, on a piece of legislation to 
expand the very narrow--we have a very narrow piece of 
expunction. But I am also working with him on this sealing law 
to try to help people who have been convicted of a crime, who 
served their time, to be able to seal their record so that they 
could take that next positive step in their life the way that 
you have. I think you really exemplify--
    Rev. Hatcher. Well, they could seal them. Yes. I should 
say, sir--excuse me for interrupting. They could seal them. But 
in terms of making it go away, then yes.
    Mr. Taylor. But understand, under Federal law, there is no 
sealing provision today. None.
    Rev. Hatcher. No. And it is terrible--
    Mr. Taylor. It would make sense to me to take the lessons 
that we have learned on crime at the State level and apply them 
to the Federal level and really give so many millions of 
Americans their chance to get their lives back.
    Mr. Chairman, I yield back.
    Chairman Himes. The gentleman's time has expired.
    I now recognize the Chair of the Full Committee, Chairwoman 
Maxine Waters, for 5 minutes.
    Chairwoman Waters. Thank you so very much, Mr. Chairman. I 
am so pleased you are holding this hearing. And this is a 
subject that has been talked about and talked about and talked 
about, and I think now what you are doing is providing the 
leadership for us to really do something about it.
    I would like to address my question to Rev. Dr. Hatcher and 
Mr. Koch. You have worked directly with survivors and with 
efforts to support survivors. Without proactive engagement, it 
can be difficult for survivors, whose credit and identities 
have been misappropriated and damaged, to secure employment or 
shelter. Lacking identification such as birth certificates or 
driver's licenses, they face hurdles in accessing the banking 
system and navigating services to access benefits and restore 
identities. Can you illustrate how the financial services 
industry can help and how non-profit services, law enforcement, 
and government can take action to support survivors so they may 
escape this nightmarish cycle of abuse?
    Rev. Hatcher. First of all, it is an honor, Chairwoman 
Waters. I am a great fan of yours.
    So, I will give you an example. What happened when I was in 
my exploitation was, one of the traffickers involved in my 
orbit got me to sign for a car, because, before my trafficking 
experience, I had A-1 credit, so he had me sign for a car. I 
still have that, even though it was years ago and I have worked 
around it, it is still something that they call me for. And, of 
course, there is interest. But that in itself, there was fear.
    First of all, survivors have a hard time making it back 
because of--I had financial literacy in my previous life, but 
after exploitation, I did not even--I was scared. And I did not 
have the ability at that time to get my credit report run, out 
of fear. I knew how to do it, but most survivors--many do not 
ever have a credit report run, know what they need to do to 
rebuild their credit, or obtain for the first time a credit 
card. It took me time to get my bank account situation back 
because I was scared to even try to do that again.
    There needs to be financial literacy. There needs to be 
financial coaching for survivors so that whatever point they 
need to start doing this, to get that financial foundation, 
they need support. They need help, and they need someone who is 
going to help them navigate the system, the financial systems, 
to get their lives back.
    The other thing, though, I would say, not only that, is to 
deal with the fact, in therapy, that this was not your fault. 
There is so much guilt associated with--you look really bad 
when you have bad credit. It is just most people think of--but 
when you look at it as somebody who is not going to give me 
that chance, they are not going to give me any of the chances 
along any lines, and now I cannot even get a bank account or a 
credit card.
    Chairwoman Waters. Wow. What a nightmare.
    Mr. Koch?
    Mr. Koch. Yes. Thank you, Madam Chairwoman. It is nice to 
meet you.
    Chairwoman Waters. Thank you.
    Mr. Koch. The Liechtenstein Initiative that I participated 
in, and it is still very active, is a public-private 
partnership cosponsored by the governments of Australia, the 
Netherlands, and Liechtenstein, and co-convened by Muhammad 
Yunus, the Nobel Peace Prize winner for micro-credit.
    We created what we call the Survivor Inclusion Initiative. 
We recognized very early on that survivors, if they are lucky 
enough to escape their traffickers, often learn that their 
identities have been hijacked, and that can make it impossible 
to open a bank account. Their credit histories have been 
ruined, and it can be difficult to get a job, difficult to get 
an apartment. And, of course, all of that makes them more 
vulnerable to re-victimization.
    So, we created the Survivor Inclusion Initiative. I brought 
together 12 global banks. And in partnership with Polaris, who 
brought together some of the larger victim service providers in 
the country, we created a mechanism to open simple checking and 
savings accounts for [inaudible] survivors. And it is really 
very gratifying to be able to report to you that in about a 
year's time, we had opened approximately 2,000 bank accounts--
    Chairwoman Waters. Wow.
    Mr. Koch. --in the U.K., Canada, and the U.S, and that 
program continues.
    Since I am out of time, I will mention very quickly that 
the suggestion that you mentioned about credit repair and 
financial literacy is a concrete area where a lot of 
stakeholders can make a contribution. There is an opportunity 
for credit repair legislation and financial literacy programs. 
We are working on those, as well, and would be happy to speak 
to the staff to continue that discussion.
    Chairwoman Waters. Thank you so very much. I appreciate all 
that you have done and the leadership you have provided. And 
there is hope, given the kind of reformation that you share 
with us, for us to be able to do something about it. And with 
Mr. Himes in charge, we are going to get something done.
    Thank you very much.
    Chairman Himes. The chairwoman yields back.
    The gentlewoman from Missouri, Mrs. Wagner, is recognized 
for 5 minutes.
    Mrs. Wagner. I want to thank Chairman Himes and Ranking 
Member French Hill for allowing me to speak at this hearing. I 
am subcommittee-crashing at the moment, but I am grateful for 
them allowing me to discuss an issue that I am so passionate 
about, and talk about the bad actors that can profit and evade 
detection through the financial services industry.
    I was so proud when Congress passed my Fight Online Sex 
Trafficking Act (FOSTA), with the help of many of our witnesses 
and so many on this committee, also, on a bipartisan basis. I 
can say that FOSTA was also--we led the only successful effort 
to amend the increasingly controversial Section 230 of the 
Communications Decency Act in the history of Section 230, since 
1996. And FOSTA really helps expose and hold accountable 
websites that profit from modern day sex slavery.
    The financial services industry plays a pivotal role in 
combatting trafficking, and these stakeholders must ensure that 
their products are not being used to purchase child sexual 
abuse and sex trafficking material. I have worked at length 
with credit card companies to help them better scrutinize their 
payment processing.
    And following the tireless campaign of Traffickinghub and 
Laila Mickelwait, which precipitated a scathing report from the 
New York Times in December on the massive amount of rape and 
child sexual abuse materials on Pornhub, as was previously 
stated in her testimony, Visa, MasterCard, and Discover 
announced that they would no longer process payments to the 
website. And just days later, Pornhub removed up to three-
fourths of its library, totaling roughly 10 million videos. 
This is a good first step, but more must and can be done.
    The coronavirus pandemic has exacerbated the problem of 
online enticement to an unprecedented degree, and Laila, who 
hails from my home State of Missouri, has done tremendous work 
to expose other websites, like OnlyFans, that promote child 
sexual abuse. But credit card companies still service OnlyFans 
and the site uses mainstream, low-risk, merchant category 
codes, despite charging customers for explicit content that 
preys on our children. I hope that by shedding light on these 
bad, bad actors today that financial services companies will 
choose to better scrutinize these sites.
    I am also thrilled to welcome Marian Hatcher as a witness 
today. Marian was indispensable to my team as we worked to get 
FOSTA over the finish line, and she is truly one of the 
nation's preeminent public servants.
    Ms. Mickelwait, given your experience with Pornhub and 
MindGeek, how can financial services companies take proactive 
steps to ensure that their services are not being used to 
purchase child sexual abuse material online?
    Ms. Mickelwait. Yes. Thank you for that question, and thank 
you for your work, Mrs. Wagner. I have really appreciated, as 
an activist, your passion and dedication to fighting sex 
trafficking specifically. So, thank you. Thank you for that.
    And I hate to sound like a broken record--often I feel like 
I am--but these companies--when you are talking about sex 
trafficking, when we are talking about sex acts that are being 
uploaded online, we need accountability and oversight on the 
nature of those sex acts. Credit card companies should not be 
allowing their services to enable transactions if these 
companies are not verifying that these are not children who are 
being trafficked and raped for profit on their site; and that 
these are, in consent and agreement, that these are not women 
who are being assaulted, who are being drugged and raped, who 
are being trafficked for profit, as well.
    Mrs. Wagner. And if I could, Ms. Mickelwait, because I am 
running out of time here, how does the mislabeling of merchant 
category codes, such as this case with OnlyFans, make it more 
difficult for financial services companies to monitor potential 
human trafficking and child sexual abuse?
    Ms. Mickelwait. Unfortunately, my expertise really has 
focused on the big porn sites, like MindGeek sites, and I am 
not familiar with those merchant category codes. So, 
unfortunately, that is not a question I would be able to 
appropriately answer.
    Mrs. Wagner. My time has expired. Mr. Chairman, I want to 
thank you. This is so, so very important. And I would like to 
submit the rest of my questions for the record. And, also, I 
would like us to really look into these merchant category codes 
and bring it to light through our Financial Services Committee 
and through your subcommittee. So, again, thank you for 
indulging me and for convening this really important hearing. I 
am grateful.
    Chairman Himes. The gentlelady's time has expired.
    And I would like to thank our witnesses for their very 
powerful, very useful, very pragmatic, and constructive 
testimony today. I think I speak for all of my colleagues when 
I say we are grateful for the opportunity to discuss in a 
bipartisan way how we can address one of the uglier aspects of 
our society.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    With that, I thank the Members, and I particularly thank 
the witnesses, and this hearing is adjourned.
    [Whereupon, the hearing was adjourned at 1:46 p.m.]

                            A P P E N D I X

                             March 25, 2021
                             
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]