Trend of Child Sexual Abuse - Insights on Online Payment Regulations

Child exploitation is an alarming problem throughout whole world. It particularly threatens the safety of children in developing or underdeveloped countries, where poverty is the biggest cause of child abuse or child sex tourism.

Owing to the technology enhancement and increased access to the internet, online child sexual exploitation materials (CSEM) has boomed. . Live-stream sexual abuse (or known as pay-per-view offending) has shown a dramatic growth among all kinds of online or offline child exploitations. The widespread use of smartphones has facilitated the share of photos or videos on the internet by teens or even children, which has created loopholes for CSEM distributions. With the aid of smartphone and internet access, children can do live streaming in toilet, bedroom or anywhere. There is a tremendous growth of children being groomed and deceived to live-stream sexualized content in recent years. Many of these self-generated materials were intended to share in private closed groups, nevertheless, they ended up in online forums or other illegal sales channels.

Child sexual abuse images are traded and exchanged online by millions of users every year and create commercial value of billions of dollars. This explains why so many criminals risk their freedom in committing such crime. CSEM trading is strictly forbidden by Visa GBPP, Mastercard BRAM and local law. To avoid CSEM transactions from entering the payment system, here are some tips for payment service providers (PSP) and banks.

First, they have to pay special attention to countries with high risks of child exploitation. While basically every country has the chance to engage in the distribution of CSEM, there are some reasons which make children in certain countries more vulnerable. For example, ignorance of such crime by the society and law enforcement, easy access to the internet, poverty, and generally good English language proficiency etc.  Philippines, which fulfills the above criteria, was described by UNICEF in CNN news as “the number one global source of child pornography and the epicentre of the live-stream sexual abuse trade". According to UNICEF, half of the monthly reports of cybercrime in Philippines were related to child sex abuse.

Second, it is necessary to closely monitor high-risk businesses such as live streaming and image hosting, which are very popular distribution channels of CSEM. In some popular hosting sites, images can spread to millions of people in the world very quickly. On the other hand, live streaming is a convenient channel for immature teens and children to get real-time response and financial benefit from offenders globally.

Third, they should provide adequate training to compliance staff. It is very common to have misunderstandings of the definition of child abuse crime. For example, cartoon and text material of child sexual acts are often confused by people of its illegality. Correctly identifying the illegal child exploitation materials may not be a common sense of everyone.

Last but not least, it is very important to be aware of transaction laundering which involves in the majority of illegal online transactions. Transaction laundering is an easy-to-deploy method commonly used by criminals to hide illegal tradings from banks and PSPs. Simply redirecting the payment from the illegal sites to a registered site approved by bank, bad merchants can process those child abuse transactions through banks and PSPs and potentially lead to heavy penalties by card schemes and authorities. While many banks and PSPs may not have the technology or skills to detect transaction laundering, employing third party vendors can be a way out.

Limiting offenders’ payment option will be an effective measure to disrupt the trading of CSEM and keep the payment environment clean. We have accomplished a lot in past years but still have a long way to go.