LOW levels of financial awareness are a significant reason that children and young people are being used for money-laundering, new research has found. Social media and online games are the main channels through which abusers make contact.
A total of 6434 under-21s have been financially exploited for their bank accounts during the past year, the fraud-prevention service Cifas has found. This is described by the Children’s Society as “a stark reminder of the scale of this hidden threat” and informs the charity’s report Moving Money: Uncovering the reality of exploitative money laundering and other forms of child financial exploitation, its first study of the problem.
The report, published last Friday, addresses how well specialist child-exploitation professionals understand and apply the category of “child financial exploitation”, and brings together experiences of professionals working with young people in the field.
The Children’s Society’s chief executive, Mark Russell, said: “Our research exposes how prevalent and poorly understood this issue is, highlighting an urgent need to act decisively to protect children’s futures.
“The Children’s Society is now urgently calling on government, the police, financial regulators, and banks to work together to tackle this hidden crisis, setting an ambitious target of significantly reducing child financial exploitation by the close of this parliament.”
The charity initially became aware of child involvement in exploitative money-laundering in the early 2020s, when its partners and practitioners uncovered situations in which children were manipulated or coerced for the use of their bank accounts. The situations are described as “where a child had been deceived, manipulated, or forced to move money that belonged to someone else”, and, in exploitation terms, “a phenomenon only recently — and still rarely — recognised by safeguarding professionals in the UK”.
Research was undertaken with more than 100 children and professionals. It found “significant gaps in understanding among teachers, parents, and police about child financial exploitation, leaving young victims often blamed or penalised for crimes they are forced into, rather than receiving the support and protection they need”.
For the 15-17 age group, severe violence is found to be a particular problem. “Severe violence, including gunshot wounds, stabbings, and severe beatings as a direct result of financial exploitation are often found, along with coercive tactics such as threats against their families, financially motivated sexual extortion (‘sextortion’), and fears of criminal prosecution.”
Exploiters, the report says, monitor social-media sites, create fake profiles, and post what appear to be legitimate job adverts to draw in young people. Through online messaging, they persuade them to open bank accounts and take part in “get-rich-quick” schemes.
Levels of financial awareness of children and young people do not differ according to wealth or poverty. All are vulnerable, as criminals look to exploit their access to credit, financial products, or accounts that “easily mask illicit activities”. Frozen bank accounts are another aspect, which can leave “families without access to essential financial services needed for basics like food and energy bills”. Drug use and other forms of abuse are prevalent, the study says.
To address the problem, the Children’s Society suggests comprehensive education for children about healthy relationships, including awareness-raising about grooming and exploitation; specialist financial-exploitation training for professionals, including teachers, police, social workers, and financial-sector employees; improved banking safeguards to protect young customers; legislative changes to enhance protection against exploitation; tackling underlying risk factors, such as poverty and school exclusions; and further research into the financial exploitation of children.
Cifas issued new guidance this year to help its members to file proportionately to the National Fraud Database. Its chief executive, Mike Haley, said: “The scale of harm caused by the financial exploitation of young people is deeply concerning. Tackling this issue demands a united front — industry, government, financial institutions, and regulators must work together to stop fraudsters targeting young people and taking advantage of them both financially and emotionally. We’re proud to stand alongside the Children’s Society in strengthening this vital partnership.”
