Europe’s Clandestine Economy: The Financial Impact of Human Trafficking

11 Mar 2021 – Written by Jessica Sumner

Human trafficking in its various forms has deep seated economic implications as an integral mechanism of the informal economy. The transactional nature of human trafficking both indentures those being trafficked and creates a cyclical system in which the trafficked become the traffickers. This cycle becomes difficult to break out of as the trafficked person is often indebted to certain fees or does not have the agency to remove themselves from this informal sector which is closely associated with other criminal activities such as money laundering, weapons sales, and drug trafficking. Throughout Europe, the effects of trafficking are scarcely touched on despite being a major destination route and hub for trafficking. With victims being trafficked from several continents into Europe, and through various trafficking routes, providing data to track the economy which they themselves generate is a difficult process. Trafficking in Europe is mostly seen in the forms of labour, migration, or prostitution. All forms of trafficking are detrimental to the European formal economy and human capital of every nation.

With each form of human trafficking, there needs to be a specialised approach to uncovering and combatting trafficking systems. First, illegal labour migration in Europe is mainly blue-collar work that is done by migrants in order to receive a certain citizenship status. Like most trafficked individuals, those that are trafficked in order to perform a certain type of labour, without proper documentation for the country they work in, often are driven by a combination of push and pull factors. Whether this be conflict, lack of opportunity, or persecution, these people are ultimately seeking better economic opportunities elsewhere. Simultaneously, the prospect of a better economic situation in another country with the chance to escape the circumstances of one’s own home country pulls trafficked victims towards another reality. Also, it is important to note that those who are trafficked do not stay in one country, but are often trafficked through several countries. People who are trafficked for reasons of prostitution are similarly noted to be driven by pull factors of better opportunities, and may sometimes be unaware of what will be asked of them. Part of the process of trafficking requires smugglers to arrange for the trafficked peoples to be discreetly transported across borders. These smugglers are paid a considerable amount and often provide the trafficked with falsified documents.

Indeed, the business of trafficking is considerably lucrative. Due to the underground nature of the trafficking industry, the exact value is unknown but is estimated at $150 million generated per year. Additionally, in trafficking, the finances are often first paid for by credit, cancelled, then paid in cash, leaving not much of a digital trail to follow. Traffickers have also increasingly used cryptocurrencies for transactions due to their increased online anonymity. Because of the lucrative appeal, there have even been cases of European government officials profiting from trafficking. In Belgium, one official accepted payments from Christian Syrian refugees in exchange for Belgian visas. The victims paid a considerable amount of money, and thereafter, none of whom showed up in Belgium, but are expected to have settled with their EU passports in other parts of Europe. Engaging in this risky form of transaction also creates a dangerous predicament for those being trafficked. Because trafficked peoples are not in charge of their own finances, they do not have full autonomy, and may be subject to abuse. Usually, trafficked victims become indebted and as a result are trapped into a vicious financial cycle in which they are tied to the trafficker by immense amounts of money. Consequently, it is difficult for those who are trafficked to breakaway from this illicit finance system, and instead they continue to work in the informal sector, which goes against the financial economy of the EU, and greater Europe. Activities within the category of the informal sector, such as trafficking, are undocumented by the government and evade taxes, regulation, and general detection. Not only does this create a precarious situation for victims of trafficking, but it creates a system that goes without the control and domain of governmental financial institutions.

In addition to being a lucrative industry, trafficking is also often hidden behind a veil of anonymity. This can make it hard to trace transactions and track down traffickers, but several financial indicators of trafficking have been identified. First, there is a pattern of multiple employees being paid under a single account as traffickers often control several people. Large sums of money transferred rapidly from an account or withdrawn is another indicator that the account belongs to a trafficker. If a person is seen avoiding bankers, and primarily uses automated money transfer machines, then they may also be taking part in trafficking, and attempting to avoid being noticed. Lastly, it has been identified that if a person does not have transactions related to their own living expenses, this could possibly be a sign that they are involved in trafficking. It is important to note that these are patterns that have been noticed, and are not indicators that provide complete certainty. 

To address human trafficking, an absolutely comprehensive approach must be taken, including in the countries of origin, transit, and destination. Moreover, it will require commitments between legislative structures, law enforcement, and financial institutions to work together in eliminating trafficking. It would also benefit all governments to further raise awareness and fund research regarding the topic of trafficking, as to make the public more aware of suspicious activity and the mechanisms in place to provide justice. Ultimately, it is in the best interest of the EU to invest in its people and prevent all forms of trafficking. 

Unfortunately, a recent, detrimental development in the European context is that of Brexit. The UK’s departure from the EU will continue to lead to weak strategies towards combating trafficking in all forms. This weak institutional structure will further hinder efforts to create a unified approach towards preventing trafficking within Europe. Second, as the UK is a major destination for trafficked victims, preventing traffickers on their route, whether it be from Eastern Europe or the Maghreb region, is complicated by a lack of coherence on the split between EU legislation and that of Great Britain. Therefore, it is crucial that the UK and Europe continue to work together on issues of migration and trafficking as to create a more unified approach. Since both are major destinations for trafficked victims, trafficking harms both economies as these illegal activities continue to generate considerable profit.

Human trafficking in all of its forms significantly hinders both human and economic development. As Europe faces the Covid-19 pandemic, human traffickers may become less of a priority for government officials, creating a more dangerous situation for those who are trafficked. As previously mentioned, there have been cases of government officials aiding and abetting trafficking, furthering the obstacles to identify and protect those who are trafficked. Since trafficking is part of the informal economy, and is as lucrative as other criminal activity such as illicit arms and drug sales, it needs to be tackled with the same amount of vigour as that given to issues of state security. Trafficking poses a risk to state security because it undermines governmental legislation and institutions, posing a risk to any civilian who may be vulnerable to be trafficked. It would behoove government officials and financial institutions to improve mechanisms in place to identify and stop trafficking. Since trafficking is conducted across borders, it would be especially useful for European countries to band together in an EU wide effort to prevent trafficking as soon as possible and as close to the origin country as can be done. Through coordinated efforts between policy makers and law enforcement, human trafficking can be eliminated in all its forms throughout Europe.

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Recommended citation:

Sumner, J. (2021) Europe’s Clandestine Economy: The Financial Impact of Human Trafficking, IDRN, 11 March. Available at: [Accessed dd/mm/yyyy].