Anti-slavery policy is just as important as anti-money-laundering, says new report

The need to fight modern slavery and human trafficking (MSHT) should be just as high on the radar of banks and financial services companies as anti-money-laundering (AML) and counter-terrorist-financing initiatives.

That’s according to a new 84-page report from anti-financial crime organisation Themis, in partnership with the Independent Anti-Slavery Commissioner and anti-slavery platform the Tribe Freedom Foundation. The research was supported by the NatWest Group, TSB, and financial services consultancy RedCompass. Download the full report via this link.

There are over 40 million people in forced labour and modern slavery worldwide, generating an estimated $150 billion in annual profits for criminals, unscrupulous employers, and regimes with lax human rights records.

Financial services companies have a critical role to play in combating these issues in their supply chains and customer bases, says the report.

In the UK alone, it is estimated that 130,000 people are connected to slavery and exploitation. However, the year-long study of over 1,000 finance industry professionals found that 45 percent of senior managers are unaware that such problems exist in the UK, as are 30 percent of their employees.

Over one-third (36 percent) of finance industry employees think that their organisation has no influence at all in combating slavery and exploitation, while over two-thirds (68 percent) do not believe the subject had been raised seriously – if at all – by management in the last 12 months.

“Many companies see the publishing of a modern slavery statement as nothing but a tick box exercise,” adds the report.

“Many financial institutions that publish a modern slavery statement focus only on the direct impacts of their business, such as cleaning or catering staff, or the construction of office buildings, without acknowledging the far larger impact their business has through its investment, lending, and client relationships.

“Whether a criminal gang is laundering money through a high street bank or sophisticated criminals are transferring money internationally, whether your pension is investing in a company that uses bonded labour or your savings are invested in abusive garment factories, money is the driving force behind every case of exploitation.”

Dame Sara Thornton, UK Independent Anti-Slavery Commissioner, said:

“I have written to the CEOs of major financial institutions asking them to respond to the worrying findings that this report highlights and let me know what they are going to do to address modern slavery and human trafficking within their organisations.”

So what can the industry do? Among the report’s recommendations, it advises that:

  • Leaders should take a prominent stand against abusive practices in their supply chains and business activities.
  • Banks and financial services companies should undertake regular due diligence to check for abusive practices is their supply chains – and in their investments.
  • Banks and financial services companies should integrate modern slavery red flags into their existing AML frameworks.
  • MSHT elements should be incorporated into current risk assessments and due diligence processes.
  • Companies should map and monitor the direct risks of modern slavery in their day-to-day activities by performing risk assessments on staff, suppliers, and business partners.
  • Procurement departments should review recruitment processes of suppliers and ensure the same is carried out across the supply lines of partner organisations.
  • Leaders should encourage a culture of transparency on cases of MSHT within the organisation, and in its supply chains and business relationships.
  • Companies should publicly report any cases, or suspected cases, of MSHT in the supply chain, and their intended remedies.
  • Publicly identifying the risks demonstrates that monitoring systems are effective and encourages greater awareness of, and engagement with, the issue.
  • Investment companies should incorporate MSHT elements into any enterprise-wide Human Rights Due Diligence framework, to ensure a joined-up approach across all functions and tiers of the organisation.
  • Lenders and investors should engage with companies and demand proof that modern slavery is not present in their supply chains as a pre-condition of any investment or lending.
  • Retail bank staff should be trained to look for wider patterns of suspicious activity as well as looking at individual accounts.
  • Retail banks should facilitate access to bank accounts and ongoing support services to the survivors of modern slavery.
  • Where banks wish to support philanthropic causes, they should consider supporting charities that work on MSHT issues that relate to their core business.

The report warns that single pieces of information or evidence about MSHT may not be sufficient to bring a successful court case. This is why collaboration between banks and law enforcement agencies is key to enabling investigators to see the bigger picture, including the sum of many different pieces of evidence.

Dickon Johnstone, CEO of Themis, said,

“Financial institutions need to take a good look at their core business activities, and understand where their money is going and what types of business it is enabling.

“I challenge any senior manager who says their organisation has no links to modern slavery to prove it. There are 40 million people in slavery in the world, so chances are your institution will have either direct or indirect links to modern slavery and human trafficking somewhere within your operations, your supply chains or in those businesses you lend to or invest in.

“Don’t turn a blind eye. Do something about it.”