Allegations highlight systemic issues in payment network compliance

Mastercard and Visa, two of the world’s largest payment processors, have been accused of failing to block the flow of illicit funds tied to child sexual abuse material and sex trafficking on the widely-used adult content platform OnlyFans, according to a whistleblower complaint filed with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

The whistleblower, a veteran compliance expert in the banking and credit card industries, alleges that the companies knowingly allowed their networks to facilitate illegal transactions on the platform, despite being made aware of the issues as early as 2021.

The complaint, filed in January 2023, also implicates the U.S. Justice and Homeland Security departments, urging these agencies to hold Mastercard and Visa accountable for what it describes as a “willful failure” to prevent the laundering of proceeds from child sexual exploitation and trafficking.

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Whistleblower cites repeated warnings ignored by payment giants

In a series of calls between 2021 and 2022, the whistleblower and a group of anti-trafficking experts, including federal agents, warned Mastercard and Visa of unlawful content on OnlyFans. The complaint also references a 2022 study conducted by the Anti-Human Trafficking Intelligence Initiative (ATII), which identified numerous accounts on OnlyFans with indicators of child sexual abuse material or sex trafficking.

Federal agents reportedly corroborated the presence of illicit content on the platform. However, despite these warnings, Mastercard and Visa allegedly continued processing payments for content described as illegal, thereby directly handling proceeds from criminal transactions, according to the complaint.

“The card companies had the power to turn off the switch and stop illicit material from being monetized,” the whistleblower stated in an interview, emphasizing the companies’ responsibility under the Bank Secrecy Act to maintain effective anti-money laundering programs.

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Payment processors deny wrongdoing, stress compliance measures

Both Mastercard and Visa have refuted the allegations. Responding to questions from Reuters, spokespeople from both companies stated they were unaware of the whistleblower complaint until recently.

A Visa spokesperson emphasized the company’s “robust compliance requirements,” adding that financial institutions or merchants failing to meet these standards are terminated from its network.

Similarly, Mastercard’s representative asserted that the company holds its payment system users to high standards and acts upon confirmed illegal activity. “No evidence of current illegal activity has been provided to us,” the spokesperson said, noting that law enforcement agencies had not referred any specific incidents for investigation.

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OnlyFans and growing scrutiny

OnlyFans, a subscription-based platform known for its adult content, has grown into a dominant force in the creator economy, generating $1.3 billion in revenue in 2023 alone. Despite its success, the platform has faced mounting allegations of hosting child sexual abuse material and facilitating sex trafficking.

In July 2023, Reuters reported that police complaints alleged hundreds of sexually explicit videos and images of minors on the platform, some involving children as young as toddlers. In December, a child exploitation investigator identified 26 accounts on OnlyFans that appeared to feature underage teens. The accounts were swiftly removed, but the issue underscores the platform’s vulnerabilities.

OnlyFans, headquartered in the UK, has consistently stated that it enforces a “zero-tolerance policy” against child abuse and trafficking. The company claims to aggressively target, report, and assist in prosecuting anyone who violates its rules.

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A broader industry problem

The allegations against Mastercard and Visa come amidst a broader reckoning in the payment industry. In 2020, the two companies, along with Discover, ceased processing payments for Pornhub following revelations of child sexual abuse content and other illegal material on the site.

Both companies have since introduced stricter compliance rules for merchants dealing in adult content. Mastercard implemented enhanced standards in October 2021, requiring merchants to verify the age and identity of individuals depicted and submit monthly reports of potentially illegal material. Visa followed suit in 2023 with tighter rules for high-risk merchants.

Despite these measures, the whistleblower’s complaint accuses the companies of shifting the responsibility for monitoring illegal activity onto banks while continuing to profit from transactions tied to criminal enterprises.

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The need for accountability

Advocates say that the latest allegations highlight the need for stricter oversight of payment processors and online platforms. “The ease with which child sexual abuse material is monetized on platforms like OnlyFans is a systemic failure,” said a representative of the ATII.

The whistleblower, who remains anonymous under FinCEN’s whistleblower protection program, criticized the lack of action by the agencies named in the complaint. “To my knowledge, no one has contacted me to discuss the findings,” he said.

As the investigation continues, Mastercard and Visa face growing calls to ensure their networks are not complicit in facilitating crimes. Meanwhile, OnlyFans must navigate the challenges of maintaining a safe platform while balancing its lucrative business model, which depends heavily on card transactions.

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The path forward

The complaint underscores the need for tighter regulation and greater accountability in the financial industry. Without swift and decisive action, experts warn that the monetization of illegal content on platforms like OnlyFans could persist, undermining trust in payment networks and exposing vulnerable individuals to continued exploitation.