Human Trafficking in Canada: A Compliance Perspective (Part 2)

Welcome back to part two of our conversation on

human trafficking and anti money laundering in Canada. If you

tuned into the first half, you heard our guest anti financial

crime consultant and human trafficking investigator

jenishabat, outline the grim realities of human trafficking

across the country and the impact it has on vulnerable

individuals. We explored the types of exploitation that exist

right under our noses, and began discussing how organized crime

networks sustain this industry. In this episode, we'll dive

deeper into the inner workings of trafficking networks, how

they operate, launder funds and evade detection. Janesha also

shares specific red flags and practical advice for

professionals in real estate finance and beyond, so you can

recognize potential trafficking cases and be part of the

solution. Let's get back to our conversation and explore the

tools we can all use to make a difference in the fight against

human trafficking.

So typically, you'll see someone who has all

this money, has to wash it somehow, and is using quite a

few nominees or brokers, or whatever you want to call them

to, to straw man, their their buying. Does that answer your

question? Yeah,

certainly. And I mean, I think how that would try

to kind of really make that real for for a real estate agent or

mortgage broker, it's the person who walks in and explains they

have to do this deal, but really has no understanding of the

background behind the deal that they're presenting as something

they absolutely need to do. And you know that could be the the

investor client who wants to buy a proper a rental property, but

who, like never talks with you about any rental rates or

vacancy or property management services or anything like that,

like, Well, that seems weird, because suddenly the that that

there's a disc disconnection there that should be sparking

some further conversation, and to think that that might lead to

Human trafficking is actually like a really interesting way to

get there. So, yeah, I

think a great way of thinking about this is just

like a criminal enterprise. I think they might have their

tentacles in very many market segments or verticals. I mean,

if you think like a criminal, you would too, right? So it's

not just someone who's human trafficking. Now, if they live

on the West Coast, they could be dealing with gangs or like

supporting money laundering structuring, happening through

casinos, etc. They could also be supporting Mexican drug cartels

with washing their drug proceeds, which apparently is an

organized service that you know, Chinese criminals do offer so I

do extensive investigations on illicit massage businesses, and

that's where I kind of modeled off this one to $2 million of

victim figure. It's very typical. It's a very average

number for them. Wow,

you brought up illicit massage businesses, so,

and you've talked about the that that's an important part of the

the repertoire of a of a human trafficker. Can you kind of

explain that to go, go into the the details of how that plays

out, and why that's important as a tool of money laundering, in

that in this business, in this illegal business,

illicit massage businesses. Yeah, yeah. Okay. So

it started in early 2000s maybe late 90s in the United States,

first when Chinese organized criminals realized that they can

bring women to be trafficked here, and they can take

advantage of our asylum. You know, mechanism, sorry, asylum

visas, or what do you call them? Asylum shelters?

Oh, okay, like a refugee status. Person, asylum

status, yes, yes, yes, yes. So they they found

this vulnerability they could take advantage of. The other

thing they found is an opportunity, because it appears

that many buyers have a have an interest in Asian women. And,

you know, they, they've they fetishize Asian women. And so

the criminals knew exactly how to speak to these buyers, and at

that time, none of these services existed. So what they

did is created a very legitimate looking enterprise, and that's

why we say everything happens in plain sight, because this is

trafficking behind the veils of a legitimate massage business.

They can be licensed, and then they can be even issuing RMT

receipts, which does happen here in Canada especially, but the

receipts are coming from a legitimate person. What happens

behind closed doors is full services being. Offered. Now the

way the recruitment happens is something we need to understand.

These women are systematically brought here. They're sold this

dream of, you know, living in the West, in Canada. As of late,

they've been coming as international students. Before

they might have come as like religiously persecuted refugees

or visitors, even. And now they have incurred this huge debt,

typically, 30,000 US dollars, that's the average debt. And now

they've come here thinking they're going to be able to

repay the debt,

okay? And they they do the work in these massage

businesses to repay this debt, and presumably it's a never

ending debt cycle that they enter into as as part of the

services of working in the massage business. I suppose is

how this plays out, is that the reality of life for for some of

these victims, yeah,

it's much worse. It's really unfathomable how

painful their lives are. Once they get here, they already come

from a culture where they might not be accepted socially if

they're older, say in mid 20s. You know they usually call them

like throw away women, women who are not accepted by a family, by

a husband. Now what are you going to do with them so they're

socially ostracized. They come here. They have this youth that,

and now this IMB family becomes their new family. So now they

are grooming them to say, These Canadian men, these American men

are God, you do whatever it takes to please them, and you do

not complain, because now we have your documents, and now

they will take you away. You're you know you're not here

legally. So now they know that they cannot trust law

enforcement. They also really don't speak the language that

well. There is so many other cultural factors that we don't

appreciate, all the nuances we don't appreciate as a western

society, but this is a collective culture. They feel

shame and stigma. They are constantly afraid that their

photos are going to be placed on WeChat, where the whole

community is watching them. So now they're in debt. They

realize that that only keeps getting bigger and bigger,

because now they're charged for every towel they'll use, every

meal they will make in the back of that massage parlor, in a

rice cooker, every piece of condom, or every little bit of

loop they will use, they will just continue to inflate and

they are never getting out. Essentially, wow,

truly, wow. I can I'm kind of speechless at the at the

at all of that. So sorry, go ahead. I have

to say, because there might be some people who

go to legitimate massage places ran by Canadian, Chinese

nationals, and that's acceptable. You know, we have to

understand there are indicators that will tell you what

vulnerability. Vulnerability looks like, not every Asian

owned massage business. We're not claiming that that's a

trafficking entity,

yeah, and that's that's exactly where my mind

went to next, which is okay, so this is clearly horrible, and as

a society, I think we could all get behind this, not being

something that exists and or is allowed to operate in Canada, as

a realtor, as a property manager, as a mortgage broker,

what might I see? What might that look like? How would I even

know and where might that interact with my with my

business? I suppose

I think as a property manager more so. And so

what I teach law enforcement, how to interdict and how to

investigate these establishments. And the first

thing we teach is work with landlords and property managers,

because if your property manager knew that in their property

there is nefarious activity happening, and if somebody like

the ministry of labor or even someone like the Realtors

Association sent them a letter saying, Do you know this is

happening? Are you okay with this? You know we are not okay

with this, and we are going to report this. Then they might

take it more seriously. Now, if you're showing property, I don't

know if you ever have a chance to to visit, you will see signs

that are very clear of nefarious activity. For one, you know, if

you have this nice massage business. You're advertising

your massage skills, right? So you're not trying to hide

yourself. You're behind curtains. You're there is no

drapery like you want people to know you're offering amazing

massage services inside. So that would be the first thing.

Secondly, you won't have, like, 16 surveillance cameras in the

front and like some in the back. And then you won't have a rare

entrance for some special customers to come. You won't

have this, like, cars creeping behind the plaza and then

parking behind the IMB to go in, and then as soon as you walk in,

you'll see. You multiple cameras, you'll see an ATM

because, you know, they prefer cash and white label ATMs. So

you'll definitely see that you cannot, typically just walk in.

You have to ring the bell or and as a woman, and I've done a lot

of these field investigations, even even in Canada, as a woman,

I'd never get a chance to walk in, but as I just wouldn't be

allowed in, yeah, like, because there is a vestibule, and then

there is usually the main door, so you'll be waiting in a

vestibule. And I have, and I've had five to 10 minute long

conversations with women who would talk to me, but they would

not let me in. They would not let me book an appointment. But

for you, for a man, they might let you book an appointment.

Typically, they will take your number. They'll text you so that

now they know who you are, and now you're a trusted contact.

And so the next time you go, all you have to do is text and book

an appointment. And that's not how a typical business operates.

Now, if you get to go in, you'll see a lot more. You'll see a

makeshift kitchen with very little like, if you go to the

very end, like there are living quarters for many of these

establishments, and if they're not, then the victims are likely

living very close to the establishment, like in an

apartment altogether with the mama San, who is essentially a

lady who is a manager who was a former victim, and, yeah, you'll

see all those kind of signs. You'll see that the women who

are working there are typically not having long conversations

with you, and you will have to pay to the older woman at

reception. And then once you go in, is when you can have an

negotiation of services and pay that tip to get the services you

want.

Fascinating. It occurs to me that as a landlord,

as a property manager, there's almost like a look that a

facility like this might have that would be different than a

typical massage business, and as a property manager or as a

landlord, it's not unusual to come and do a walk through of

your home, or of your home, sorry, of your business, of the

property you are renting. And so it wouldn't be all that

difficult, just based on what you've talked about, to be able

to say, Okay, this is a legitimate response business,

which totally fine. And this is completely not a legitimate

massage business. They just, they look from from your

description, they look and feel different. I've been to massage

businesses. They were legitimate. I feel very

confident about that, and what you've described is not my

experience. So

yeah, and I think the first thing is, you know,

they're very proud of their branding, right? Legitimate

businesses, because they want to stand out like we are. This is

our name. A lot of the many imbs I've seen, they may have a very

generic sign, like a lot of the signs of the same, because these

are cookie cutter signs, you know, made by someone who makes

all these signs. And also they know that they might, they could

lose their license. And in Canada, it's not been happening,

right? But in a tougher jurisdiction, they know they

could lose their license, so they might have to move any day.

Why invest in branding? Why bother sorry.

Can I double click on that for a second? Did you just

say it's easier in Canada as a massage business, as in, sorry,

as an illegal massage business to operate?

I believe so. Wow, it's not easier. I mean,

it's also easier in the states to open one, but at least there

is some prosecution action happening. And because they have

such a serious problem, they definitely have many, many more

I m B's than we do here. There are jurisdictions that are

taking this very seriously. They're working with the

licensing departments here. We don't really have a national

strategy on this, and as lofty as it sounds, that's what I'm

actually trying to change. I'm trying to work with law

enforcement and tell them about all these signs and how to do a

multi disciplinary investigation. Because if you

really think about the number of women caught in these imvs, I

would say at least 15 to 20,000 in our country. And I don't want

to live in a country like that where we have all these modern

day slaves,

yeah, particularly when it seems like there's just

not easy, because nothing's easy, I suppose, but when

there's a whole bunch of things that could easily happen

together, I would imagine if somebody were to go ask the

mortgage, sorry, the massage. What's the licensing body for

massage professionals? The name of which escapes me, because,

because I don't know, but they probably would be very much on

board with helping in some sort of a licensing scheme to to help

eliminate this or to make it harder to operate as such, I

would think, anyhow, yeah,

I think they do their work inside. And that's

not to blame either entity, but that's the real issue. Losing a

license doesn't really deter this kind of crime. They could

move to another city, another jurisdiction. We have to do

multi disciplinary action. We have to do it simultaneously,

where you not only lose your license, you have violated labor

laws, and so the Ministry of Labor is aware of that, and you

you have all these injunctions, and then the law enforcement

investigators show up to do their criminal investigations,

which is really not happening at the moment, because we don't

really know who has jurisdiction, other than

Ministry of Labor, and we don't really believe, from my

conversations with law enforcement, we don't believe

that we can actually get evidence without victim

testimony, but our whole strategy against human

trafficking has been trying to inform this, that we should be

able to work with our victim testimony, right? Yeah, and

that's where financial crime professionals come in. There is

a Nexus. You asked me about this network. I am bees are very

networked. So we could talk about that in a bit, if you

like. Sure, let's

go. Let's get into that. That sounds. That sounds

like a natural next place for us here. Yeah. So what does that?

What does that look like? And what do I need to know about

that? I suppose,

just like law enforcement and, you know,

public sector entities, I think there is a great room for

collaboration in our industry. So what an IMB network looks

like? And every kind of trafficking entity will have a

network. But let's talk about IMDs. They have one person

responsible, okay, for before firstly, let's say one owner, so

one big mansion owner in Vancouver on Vancouver Island,

for example, owns five or six or seven imbs across the province.

Okay. Now they are rarely visible anywhere on paper or at

the premises, and that's why law enforcement investigations are

difficult. What they have instead are a network of

individuals acting as nominees and brokers. So the one of the

people, and I'll talk about all the positions they hold, one of

the operatives is a person who sets up shop, so his job is

simply to deal with the property manager and create like sign

these documents, and they might even hire a nominee lease,

lease, or lease, or somebody who leases the property. That's

Lisa, right, not leasing. Yes,

that sounds right? I get where you're going with

this. The person who's actually entering into the lease on

behalf of the mortgage it will be, might be one person. They

might even hire another layer beneath them to really kind of

separate out the actual owner, beneficial owner, of the whole

thing, and the person who's actually signing a lease might

be two, two levels deep, as it were, is that that's, that's

what I'm hearing. Is that cool? Okay, yeah,

and this is a paid job, so now they're making,

say, two or $3,000 a month just for having their name on the

lease. Right now that person, yeah, definitely. That person

who is setting up the shop is buying all the furniture, doing

all these cookie cutter buying all these cookie cutter branding

elements. It's usually the same massage sign and, you know, big

red fonts. You might have seen that the same everywhere they're

getting all the cameras done, they're even buying the Hello

Kitty thing, you know, that goes like this. They all have that

they're dealing with the ATM, and then they leave with so as

soon as they've set up shop, they leave nobody else within

the network knows who they are. I mean, apart from one or two

people, the victim surely don't know who they are, right? So

it's a different operator being brought into to

run the thing. Okay?

They're really separated from each other. Now,

then this person moves on to the next time, be wherever they're

needed to be. Now, the next person involved in this network

could be the mama San. Mama San, you might have heard the term,

is an older woman who was previously a victim and has

decided to or or has really no financial choice and has to stay

here to manage the other victims now she is arguably still

a victim themselves, potentially, he said, formerly a

victim, arguably they're still a victim. But carry on. Yeah,

yeah.

So the there are two schools of thought about

this. Some people in the industry, in the anti

trafficking world, believe that she's really profiting from

this, and that's the difference between so bottom is like in a

domestic sex trafficking game, bottom or really, the technical

term is bottom. Bitch is actually a victim who is now

promoted to manage the victims, and she doesn't make money. She

doesn't make so much money. She has some privileges, but a mama

San does get to make money because she is incentivized. Is

to now manage five to six victims and manipulate them,

and, you know, get them to not complain and all of that, get

them to cooperate. So she has a job, and that's why she has

incentives. So her job it is to now deal with the victims as

soon as they're brought in, train them, condition them, tell

them what the rules are, but also be this loving, you know,

mother figure, when she needs to be disciplining happens in an

emotionally manipulated, manipulative way. It's never

physical. Now, you must have wondered, but where do the women

come from? So let me introduce you to the third position here

is a recruiter, and I'm actually working on a big investigation

on a recruiter who's been recruiting really explicitly on

X for years. And WeChat women international students from

China, or really women in general, who want to come to

Canada as international students. And he says openly on

x that we will take care of the expenses. You get to come here

and work here, and you get to make money. And there is really

no conversation about school, but he does say international

students in the in the in the x, in the x post or thread. And

we've seen all of these ads on multiple forums that they used

to so this recruiter now is dealing directly with someone

who may be a visa broker, someone who's dealing with the

victims there, who's kind of like a liaison, who's making

sure the victims are coming through, and then he will

receive the victims, and he will bring them to the Mama San,

okay, who's probably going to take their documents, right? And

again, I'm describing the worst of situations here, but this is

how it typically happens. Of course, some victims may then

graduate to workers, and they're still there because they don't

really want to do anything else, but one might argue that they're

not as victimized as fresh victims anyway, so So you you

know all these players. Now, there is one key figure here,

and this is where money laundering begins. So now you

have five to six victims on average, and they are working.

They're seeing 10 to 12 guys a day, for example. They are

primarily accepting cash. So the mama San charges a house fee

could be $60 for the visit, and then inside, this negotiation

happens for what kind of services a person wants. And

because the victim is indebted, she may hand over the tips to

the mama San. She may try to keep some to herself, but

typically she knows that she has a debt to pay. So all of this

cash has to go somewhere. Some imbs may accept credit cards.

They may have different names that come up, but most of them

prefer cash, and so do the guys, right, so do the johns. So some

of them were taking gift cards during COVID that we noticed. So

all this cash, how do you think it gets picked up and then

brought to the bank? Just take a guess.

That's a good question. I mean, I'm assuming

there's another role here that's gonna pick up the cash and

launder it somehow. I guess, if you were in Vancouver, my guess

is it goes to a casino and gets lent out as a for those

purposes, for gambling, as a loan there, that's a guess. I

don't know you tell me

very well might. But I'm also thinking, like, how

similar these enterprises are when it comes to dealing with

the money. I'm thinking El Chapo and how he had people pick up

the cash and, like, move to the bank. And so that's the fourth

or the fifth position. We call him the the money handler. Yeah,

driver. I call him the driver. But many people come the money

handler. He comes to the back door, picks up the cash. He has

no, very little interaction. Mama San literally just slides

the bag of cash to him, picks it up. And then he goes from IMB to

IMB to do that, and then begins the layering. The layering,

yeah, there are just like these people. There might be more

involved. One thing I missed out here when I talked about

collaboration, is who is dealing with all of these companies that

might now be receiving the funds, all these shell

companies, all these holding companies, because now you're

dealing with millions of dollars, so they're not going to

individual accounts. And now you have lawyers, right? And we've

found in some investigations, there is a one lawyer or a group

of small number lawyers, dealing with lot of these people.

I am smiling only because as we felt as we tape

this, it's been approximately two weeks, roughly since FINTRAC

issued a special bulletin on how lawyers might be involved in

laundering money just might be and how so many STRS point to

that possibility. And yet there's this black hole of

information there. So that is fascinating. That really kind of

unpacks how to set up the organization and the and and

what strikes me is about how many people, and you said this

at the beginning, and I think this really kind of gets a level

of detail that I'm thankful for, how many people are actually

making money in this whole thing? There's, there's six,

seven positions before we even start to add in layers of

protection that we might use senior, senior victims, for lack

of a better description, to further shelter ourselves. Like

there's, there's just a lot of people generating what ends up

being a lot of money, I can only imagine, and everybody's taking

their little cut along the way to be involved in this pretty

significantly horrible activity that happens right out in what

did you say in plain view? Was that the phraseology? Yeah,

sorry, I have to tell you about a very

interesting position that I failed to mention. Okay, the

paper husband. So suppose a bylaw officer walks in, or the

Ministry of Labor walks in, because, you know, Greg

complained about this IMB. Now what's going to happen is IMB

will the mama son will notice, and she will call her Caucasian

husband, who's only a husband on paper, and his primary job is to

normalize this establishment. So, you know, you think, okay,

like, here's a Canadian guy. He's married to this lady. Maybe

this is a legitimate business. And also, you know, he's aware

of Canadian bylaws and whatnot. And so he's also making a decent

money income from this, just for

being a paper husband to show up every now and then

and kind of smooth things over, the troubleshooter, as it were.

And

if you are in this part of Canada, you know,

near the Greater Toronto Area, we also know there is an RMT

near registered massage therapist, one who is serving

several imbs, issuing all these legitimate receipts for a

massage for insurance fraud. So that's what I mean. If we

collaborate, you'll find not just money laundering, you'll

find insurance fraud. You'll find labor exploitation, all of

that

I can charge, pack, Blue, Blue Cross, whatever

they're called for my illegal massages, that's insane. Holy

crap. Never even occurred to me that that would be but yeah, I

guess you start to get into the various tentacles of organized

crime, and if everybody can make some money along the way, that's

the natural flow of things. All too careful, all too easily.

Wow. Well, this has been, like, scary, but also super

informative and and so, like, I'm, I'm truly thankful for the

the level that you've taken us to in terms of improving my

understanding of what's happening in Canada. And you've

eloquently, in my mind, answered the question of, does this

happen in Canada? It sounds like the question, the answer is a

resounding absolutely and and under our noses, as it were, but

just as importantly, I think, for us, for me today, what

you've done that's that I really want to thank you for is and I

hope our listeners will agree, given me some things that I in

my day to day might practically be able to just put into my

toolkit, into my list of things that I'm looking out for just a

little bit that might be able to to help save my through the

wrong word, but at least start to highlight where there might

be some problems. And I think if we could do just that little

bit, certainly what you had talked about was, this isn't a

There's no quick solution to this, but the incremental nature

of just kind of spreading the word a little bit. And I

certainly hope that I certainly feel like you've done that for

me. So I hope that our listeners will get that same thing out of

out of everything you said, because to me, this has been

super helpful and a little bit scary all at the same time.

I appreciate that sentiment scary, but I'm also

it's also scary how impactful we can be, and I'm truly humbled to

know that you care and that you asked, because you know you're

so early on in your AML journey. Lot of people are simply asking,

What are we required to do, and are we doing everything we're

required to do? But this is maybe just a little more, just a

little more and thinking about tangible impact. And I want to

say, once our API is ready, I really would welcome all of you,

the entire industry, to use it to make your SDR reporting much

more accurate. I

would love that opportunity, and we'll have to

continue to stay linked. That, because I think that's something

that I don't know if all of the all of our reporting entities

will will want it, but I think it's the kind of thing that I

would love to be able to help. Because it just seems to me

like, like a no brainer. Why would we not want to stop this

level of criminality within our society? Just doesn't make sense

to me. So so did you? Thank you so much for taking the time. I

know that you've got a busy life of things that involve making an

impact. I really, I really want to you to know that I truly am

humbled by your willingness to come here to talk with me today,

to share all that you have. I thank you so much for that. And

yeah, on behalf of our listeners, thank you so much.

That's all I can say.

Thank you. This is beautiful. I.