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How SARs fight online child sexual abuse by flagging financial crime  

We explain what CSAE is, its links to financial crime, the extent to which it prevails in modern society, and the crucial role SARs play in flagging it.

Napier AI
September 30, 2021

The late Nobel Peace Prize Laureate Nelson Mandela said: “There can be no keener revelation of a society’s soul than the way in which it treats its children.” Crimes committed against children are of the worst kind, since they target, abuse, and exploit the most vulnerable inhabitants of the global village. One of the most odious forms of this scourge is online child sexual abuse and exploitation, or CSAE.

“There can be no keener revelation of a society’s soul than the way in which it treats its children.” - Nelson Mandela

In this blog we explain what CSAE is, its links to financial crime, and to what extent it prevails in modern society. We will also explore how governments, law enforcement agencies, private sector entities, and non-profit organisations (NPOs) around the world work together to combat this kind of CSAE using financial intelligence, and the crucial role SARs play in flagging these crimes.

What is online CSAE?

UNICEF’S 2020 Action to End Child Sexual Abuse and Exploitation report describes this form of CSAE as the “online grooming of children for the purpose of sexual abuse and exploitation, live streaming of sexual abuse of children over the Internet and distribution of child sexual abuse content… both on the surface web as well as the hidden web.”

It is important to note that the facilitators of the abuse, be they older children or adults, can stream or create content of the victims for distribution from any location in the world, while CSAE offenders can view or download from any location in the world, irrespective of time zones or international borders.

How is CSAE connected to financial crime?

In a 2020 interview by Financial Crime News, the then UK Financial Intelligence Unit (UKFIU) Head Ian Mynot provided an outline of CSAE’s link to financial flows. He noted that payments for child sexual exploitation material (CSAM) are mostly done via money services businesses (MSBs). He also highlighted more conventional payment methods through advanced banking services and online money transferring platforms and mentioned that cryptocurrency payments have also been observed.  

Mr Mynot added that “the general pattern for payments is upfront before the material is streamed, reflecting the financial incentive for facilitators.” It is through the payment for these services that law enforcement officials can detect and bust CSAE perpetrators online.  

Clearly, tracking the financial flows associated with online CSAE can contribute to fighting this horrendous crime. This spotlights SARs, and the important role AML practitioners play in fighting CSAE.

Who are the victims of CSAE and how serious is the problem?

The annual Global Threat Assessment report (GTA) for 2019 by WeProtect Global Alliance- a multinational NPO which draws on the global expertise of government, the private sector and civil society to protect children online- presented some damning indicators of who both the victims and perpetrators of online CSAE are. It isolated four areas of concern:

  • The socio-environmental context: Technological advances added 367 million new internet users (a 9% increase) since the 2018 GTA, with 1.8 million of those thought by INTERPOL to be sexually interested in children.  
  • Victim vulnerability: UNICEF estimates that 122 million more children went online since the 2018 GTA. The ever-lowering age-limit of new users wanting to access the internet and evolving societal values and pressures have caused a 100% increase in CSAM images being reported by tech service providers.
  • Offender behaviours: The feeling of anonymity and the absence of physical proximity can increase the risk of potential offenders committing CSAE or accessing CSAM, and heighten the extremes to which they could go. An 80% increase in CSAM reports to the INHOPE global network of hotlines has been recorded since the 2018 GTA.
  • Global technology trends: While the hidden web still lurks, the surface web has amplified the prevalence of personal file-sharing networks and increased privacy, security, and anonymity. This has widened the field and bolstered the confidence of CSAE facilitators and offenders. The Internet Watch Foundation (IWF) has recorded a 33% increase in CSAM-containing URLs being removed since the 2018 GTA.

The no less harrowing 2020 UNICEF report mentioned earlier noted that adolescent girls reported the highest rates of CSAE, including these grim highlights by country, age cohort, and gender:

  • 15% of girls aged 12 to 15 reported CSAE victimisation in Spain.
  • 12.9% of girls aged 14 to 17 reported CSAE victimisation in the USA.

Furthermore, a 2020 INTERPOL report indicated that the restrictions imposed globally to counter the COVID-19 pandemic have amplified the prevalence of CSAE offending online and inhibited the capacity of law enforcement to combat it. Among the exacerbating circumstances it noted were:

  • School closures resulting in children spending more time in online learning environments, as well as the increased time children spend online for entertainment and social purposes.
  • The closure of international borders and limits on domestic travel mean that ‘in-person’ offenders are more likely to relocate their behaviour online.
  • Diminished access to the reporting mechanisms of support services, such as counsellors or childcare and education personnel, and inhibited capacity of LEAs and social services to intervene.

How can SARs combat CSAE?

The Egmont Group, a multi-national body of 167 FIUs from around the world, oversees international co-operation on combatting money laundering and terrorist financing (ML/CFT) by sharing information and analysis of financial intelligence. It runs the Information Exchange Working Group (IEWG), a project to combat CSAE worldwide.

The IEWG’s 2020 report emphasised that financial transactions through many channels frequently underscore online child abuse crime, which puts the Egmont Group of FIUs on the front line of detecting and disrupting this type of CSAE. To do so effectively, the Egmont Group requires private sector banks, financial institutions, MSBs, money transfer platforms and cryptocurrency exchanges to flag suspicious financial activity and to deliver Suspicious Activity Reports (SARs) and Suspicious Transaction Reports (STRs) which indicate possible CSAE crime.

The report sums up the growing risk to our society’s most vulnerable by noting that “online streaming of CSAE is a significant threat which is likely to continue to increase as facilitators, largely in impoverished communities, gain access to technological advancements, providing them with the means to abuse and exploit children for financial gain, and offenders with the opportunity to commit such crimes from a distance.”

“ streaming of CSAE is a significant threat which is likely to continue to increase as facilitators, largely in impoverished communities, gain access to technological advancements." - IEWG 2020 report on combating CSAE

Mandela’s sentiment echoes in this statement and demonstrates the role AML practitioners play in eliminating the scourge of CSAE. Mandela’s words throw down the gauntlet to all of us to nurture and protect the world’s children, and fight those who would harm them, our most precious asset.

The UKFIU's monthly podcast focuses on how SARs help to combat crime. Their December 2020 episode focuses on CSAE, and can be accessed here.

We have seen in this blog just how large the global scale of CSAE is, and how determined all role players, including governments, LEAs, civil society, and NPOs, are to stamp it out. We have also seen how central to combating this terrible crime the SAR reporters of the AML sector are now and will be in the future.

The next chapter of this blog series will focus on how SARs can flag the financial flows associated with County Lines drug supply and are central to disrupting it.

How can Napier help your business combat CSAE and comply with regulations?

We saw in a previous blog how important SARs can be in combatting MSHT. In this blog, we have examined the role which the financial crime compliance sector can play in stamping out CSAE. We have also reiterated the ever-increasing responsibility placed upon AML practitioners to file concise, accurate and actionable SARs to combat the scourge of CSAE.

At Napier, Mandela’s words drive us to facilitate real change. As a specialist compliance technology company, we believe that technology such as AI-led automation will sharply reduce the false positives which hamper LEA efforts to catch MSHT and CSAE criminals. Regulated organisations, regardless of size, can utilise our cutting-edge technology and AI-based digital automation to streamline your SARs processes. This will help to stamp out these modern-day plagues, and free your AML teams to concentrate on new and/or improved business processes.

Trying to get your AML compliance in line with the law?  

Contact us to find out how our systems can help or request a demo request a demo to see in action.

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