Role of financial intelligence in exposing online child sexual exploitation

In early 2023, the Central Bureau of Investigation (CBI) registered a case against Victor James Raja, a PhD scholar, who sexually exploited children aged 5 to 18 years. Over two years, Raja coerced minors – both male and female – into performing sexual activities, both among themselves and with him, while distributing videos of the abuse on digital platforms. Given the vulnerability of the victims, none came forward to report the abuse. It was only after Interpol’s forensic analysis of videos and images on the internet that Raja was identified and the case came to light.

 

His case is emblematic of a troubling pattern in Online Child Sexual Exploitation (OCSE) investigations— victims rarely report their abuse, making proactive detection indispensable.

 

 

Raja’s case is not an isolated incident, but representative of a growing trend where facilitators exploit digital anonymity to make money through OCSE.

 

A Silent Epidemic in the digital era

 

Children, the most vulnerable section of society, face significant risks in the digital world. According to estimates by the University of Edinburgh, nearly 300 million children worldwide— one in eight— have been subjected to online sexual exploitation. The psychological trauma inflicted on victims is immense, often leaving scars that last a lifetime.

 

While historical instances of paederasty, such as bacha bāzī (still prevalent in parts of Afghanistan), have been well documented, OCSE operates on an unprecedented scale. The digital revolution enables instant connection between paedophiles and facilitators, bypassing geographical constraints. Moreover, advancements in encryption technology help abusers maintain anonymity, making proactive detection critical.

 

Financial intelligence: The game-changer in OCSE detection

 

A report of the Financial Action Task Force (FATF) released earlier today, i.e. March 12, 2025 explains how financial intelligence can play a pivotal role in proactively detecting and disrupting OCSE. Developed by experts from FATF member countries (including an expert from India), Interpol, and other international organisations, the report notes two rapidly growing OCSE trends: live-streamed sexual abuse of Children (LSAC) and financial sexual extortion of Children (FSEC). Both thrive on financial incentives and digital anonymity.

 

LSAC allows offenders to commission real-time abuse globally, often targeting victims in jurisdictions lacking robust child protection frameworks. Encryption and anonymous transactions shield perpetrators, making them difficult to trace. In FSEC, predators masquerade as peers on social media platforms, tricking minors into sharing explicit images before blackmailing them for money.

 

‘Follow the money’— a crucial investigative tool

 

The FATF report emphasises that banks and payment intermediaries can detect suspicious transactions linked to OCSE by monitoring unusual payment patterns, including with the aide of AI-driven monitoring systems. The report notes that consumers of live-streamed child porn are linked to specific digital behaviour, such as purchases on dating platforms, adult entertainment sites, live-streaming platforms, and online gaming platforms. Payments made for OCSE are low value, high volume, making them distinct from typical consumer behaviour.

 

The rise of fintech in developing countries presents both challenges and opportunities in OSCE detection. As such, they are a preferred mode for low value, high volume payments, making them attractive to OCSE networks. However, they also maintain detailed transaction logs and user data that can help detect illicit activities. Effective regulation and collaboration between fintech platforms and law enforcement can significantly enhance OCSE detection.

 

Minimising victim trauma

 

FATF argues that shifting to financial intelligence-led investigation can reduce victims’ trauma by eliminating their need to provide testimony. Instead of retraumatising victims, evidence gathered from financial transactions, forensic analysis, and AI-driven pattern recognition can be used in court proceedings.

 

The FATF report also discusses the Indian Cyber Crime Coordination Centre’s (I4C) ‘1930 Take Down System’. This system provides law enforcement agencies (LEAs) with a dashboard listing takedown requests for harmful content, including Child Sexual Abuse Material. The platform utilises bots specifically designed to detect and report harmful content.

 

But for these strategies to succeed, there is a need for strong public-private collaboration; for LEAs, financial institutions, and technology companies to work together to disrupt these networks before harm occurs.

 

A case in point was the successful investigation into ‘Welcome to Video’, the largest known web portal on child pornography. The portal operated in the dark web and conducted all its transactions in Bitcoin, making it difficult to identify the portal’s promoters or paedophiles buying content on the portal.

 

LEAs extracted the portal’s bitcoin transaction ledger and then worked backwards with the help of blockchain analytics companies to trace payments back to crypto exchanges. These exchanges, which conducted Know Your Customer (KYC) verifications, provided user details that helped investigators identify perpetrators. The operation resulted in the arrest of 337 suspects globally and the rescue of 23 child victims*. This success story underscores the effectiveness of a follow the bitcoin strategy when combined with strong public-private partnerships.

 

(The writer is the director of AML/CFT policy in the finance ministry. Views are personal) 

---

  Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper