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6. Financial Sub-SectorIt has been argued within the discourse of the private sector’s involvement in CSEC,the most noticeably absent cohort of those implicated has been the financial sub-sector.This sub-sector has traditionally consisted of financial institutions, credit card companiesand third party payment companies. Newer operators include digital currency providers(e.g., e-Gold Ltd.) and virtual convertible currency suppliers (e.g., Entropia Universe). Theinvolvement of these industries in the buying, selling and trading of child abuse imageshas been known to law enforcement agencies and child rights groups even before theFirst World Congress in 1996 highlighted the connection. Despite the sub-sector’s longstandingassociation with CSEC activities, the vast majority of financial institutions haveopted not to participate in the conferences or debates on the topic and have been relativelysilent on their efforts to cease the use of their products in the course of CSEC activities.In the past three years, likely the result of a rise in fraudulent monetary transactionsincluding a general increase in identity theft, a number of reports have been publishedfocusing on a perceived need to better monitor and regulate the financial industries. InDecember 2005, the US Treasury Department published the US National Money LaunderingThreat Assessment. 392 According to the report, criminals are enjoying new advantages withglobalisation and the advent of new financial services such as stored value cards and onlinepayment services. The report identifies and assesses 13 systemic financial threats against theUS and, of those, two (e.g., online payment systems and stored value cards) are consideredto be emerging threats. The report notes:New and innovative online payment services are emerging globally in responseto market demand from individuals and online merchants… [O]nline merchants,particularly those in sectors with high ‘chargeback’ rates, are generating demandfor new payment methods. There are hundreds of these online payment systems.These markets embrace online payment systems that set their own clearingand settlement terms absent any consumer protection regulations. Typically,transactions through these service providers are considered final with no recoursefor individuals who believe they have been defrauded. The consequence, accordingto federal law enforcement agencies, is that these systems have become favoritepayment mechanisms for online perpetrators of fraudulent investment schemesand other illegal activity. 39398|Private Sector Accountability in Combating the Commercial Sexual Exploitation of Children
From a global perspective, the Financial Action Task Force (FATF) has also commentedon the use of alternative payment methods as a cause of global concern. The FATF is aninter-governmental body whose purpose is the development and promotion of nationaland international policies to combat money laundering and terrorist financing. Created in1989, the Task Force works to generate the necessary political will to bring about legislativeand regulatory reforms. 394 In October 2006, it released a report on new payment methods. 395The report found that, while there is a legitimate market demand for these alternativepayment methods – such as prepaid cards, electronic purses and mobile payments – they arehighly vulnerable to money laundering and terrorist financing schemes. Specifically, crossborderproviders of new payment methods may pose more risk than providers operatingexclusively within a particular country. The FATF report recommended continued vigilanceby all countries to further assess the impact of evolving technologies on cross-border anddomestic regulatory frameworks. However, given the level of corruption or collusion on thepart of some foreign governments in various types of criminal activities, strict monitoringand enforcement of financial transactions is unlikely.In 2006, several global financial institutions, with the encouragement of US SenatorRichard C. Shelby, partnered with the US-based International Center for Missing andExploited Children (ICMEC) to launch the Financial Coalition against Child Pornography(FCACP). FCACP is comprised of leading banks, credit card companies, third partypayments companies and Internet services companies, and represents nearly 90 per centof the US payments industry. Its goal is to eradicate the profitability of commercial childpornography by following the flow of funds and shutting down the payments accounts thatare being used by these illegal enterprises. Members of FCACP include: America Online;American Express Company; Google; MasterCard; Microsoft; PayPal; Visa and WesternUnion. FCACP also benefits from the advice and counsel provided by law firms, financialassociations, cyber security experts and US regulators.In preparation for the World Congress III, the FCACP will be circulating a paper on thework of the Coalition to date and some of the challenges the Coalition faces in meetingsits objectives. At a recent global meeting on CSR at the sexual exploitation of children andyouth, 396 a number of FCACP accomplishments were highlighted by its spokesperson,including the publication of the “Internet Merchant Acquisition and Monitoring BestPractices for Prevention and Detection of Commercial Child Pornography”, distributed bythe US Comptroller of the Currency and the US Federal Deposit Insurance Corporationto executives of banks across the country.Since the launch of FCACP, the Coalition states that it has become more difficult for USFederal law enforcement to use credit cards in their investigations. It is suggested that ifPrivate Sector Accountability in Combating the Commercial Sexual Exploitation of Children|99
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PRIVATE SECTOR ACCOUNTABILITYIN COM
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3. Travel and Tourism Sub-Sector 63
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Executive SummarySince the First an
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from the sale of child pornography
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1.1 Defining Commercial Sexual Expl
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The issue of commercial sexual expl
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1.2.1 Transnational and multination
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offer stronger protections against,
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1.3 Defining Corporate Social Respo
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Parliament passed a law requiring a
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2. International Standards and the
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In terms of international law, the
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alia: establish the grounds for cri
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The ILO Convention No. 138, Concern
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2.4 Existing Legal Mechanisms to En
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2.4.2 Existing mechanisms for regul
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Governments play an auxiliary role
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lack of ) monitoring and enforcemen
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who follow relevant international l
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the Commentary references the rule
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2.4.2.1.2.1 Tripartite DeclarationT
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Unlike the preceding sections, whic
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A major criticism of the Tripartite
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MNEs are asked to respect worker’
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Guidelines voluntary, but non-OECD
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Page 70 and 71: ecognised by customary internationa
Page 72 and 73: The report draws together a number
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Page 78 and 79: The Swedish document was originally
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Page 102 and 103: - children’s rights advocates, go
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Page 110 and 111: encourage cooperation and follow-up
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Page 128 and 129: of the Guidelines).212Ibid., Part I
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Page 132 and 133: 310Ibid., 12.311Council of Europe,
Page 134 and 135: Germany and South Africa, ISPs are
Page 137: The World Congress III against Sexu
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