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What financial institutions can do amid worsening child sexual exploitation online

Mar 24, 2022

The news of a kidnapped child always sets off public alarm and anxiety, but a newer, technology-driven threat to kids is growing more rapidly than most people realize.

The latest insidious challenge of online sexual exploitation of children is proving to be a vexing issue for the legal system and victim services. “New technologies are facilitating the online sexual exploitation of children, including the live streaming of sexual abuse of children using web cameras or cellphones, often for profit. Mobile devices also provide new and evolving means by which offenders sexually abuse children as apps are being used to target, recruit and coerce children to engage in sexual activity,” stated a 2020 State Department report.

Experts contend that tens of thousands of children globally are sexually exploited online, and the problem appears to be growing.

A related trend is the extortion of minors who are coerced or exploited into exchanging sexual images via the internet and accelerated by the use of mobile devices and social media platforms.

Offenders typically groom minors to share or post self-generated photos and other content online in exchange for money, according to the Financial Crimes Enforcement Network (FinCEN). They may be threatened with exposure if they do not engage in sex acts via web camera.

Risks rise during the pandemic

FinCEN found that between 2017 and 2020, suspicious activity reports involving the online sexual exploitation of children increased by 147%, including a 17% year-over-year increase in 2020.

The pandemic has added to the growth of child exploitation as children have had more access to the internet while attending classes remotely through various online portals. With less supervision compared to in-person learning, the risks facing kids grew.

FinCEN guidance

Due to the rise in this activity, FinCEN has released guidance in FIN-2021-NTC3, which provides institutions with specific instructions on Suspicious Activity Report (SAR) filing. SARs are crucial to identify and stop cybercrimes, including online child sexual exploitation (OCSE).

The guidance states financial institutions should provide all pertinent and available information in the SAR narrative and attachments, such as:

  • Referencing this notice in SAR Field 2, Filing Institution Note to FinCEN, using the keyword “OCSE-FIN-2021-NTC3.” This keyword should also be referenced in the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in this notice. Financial institutions may highlight additional advisory keywords in the narrative if applicable.
  • Selecting SAR Field 38(z), Other, as the associated suspicious activity type to indicate a connection between the suspicious activity reported and OCSE activity, including the term “OCSE” in the text box and, if known, entering the subject’s internet-based contact with the financial institution in SAR Field 43, IP Address and Date.
  • If human trafficking or human smuggling are suspected in addition to OCSE activity, selecting SAR Field 38(h), Human Trafficking, or SAR Field 38(g), Human Smuggling.
  • Using the specific keywords listed in the guidance in the narrative when describing suspicious activity, which will assist FinCEN’s analysis of the SARs.

The purpose for filing these SARs is to assist law enforcement in the investigation and timely apprehension of these criminals. It is critical to complete the SAR forms in the manner indicated by FinCEN so online child sexual exploitation reports can be easily identified and investigated.

How Wipfli can help

Wipfli’s team has the knowledge and experience to help you understand the role financial institutions can play in online exploitation and human trafficking investigations. We can help you ensure you’re taking the appropriate action. Contact us or continue reading:


Jennifer M. Lafferty
Consultant II
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