I don’t think this is an effect, I think its really bad compression, and then recompression, coming from a different format (PAL? to NTSC?) and a different time base (25 fps to 30) and a really high keyframe distance, too large a sampling block and probably blown up from a smaller already compressed bit of footage, and even maybe a really bad kinescope transfer.
The compression is freaking out around the faces due to the detail needed and the constantly changing expressions.
But that doesn’t help you achieve this.
My recommendation would be to use Mocha (comes with AE now) to track and rotoscope the faces and then apply blurs or smears to the face element. Or compress the hell out of the footage you have.