Modern slavery is one of the most profitable crimes in the world – by some accounts second only to drug trafficking. According to the International Labor Organization, this transnational crime generates up to US$150 billion each year. If any of this money makes its way into a legitimate bank, the act is considered money laundering. While most financial institutions are well prepared when it comes to anti-laundering procedures for crimes such as drug trafficking or terrorism, addressing modern slavery has only recently become a business imperative for banks.
One of the reasons can be found in recent anti-slavery legislation such as the Modern Slavery Act. The British act requires a broad range of companies to publicly state their anti-slavery agenda. The act also considers slavery and human trafficking “criminal lifestyle” offences, making it easier for courts to confiscate assets of convicted exploiters. Another reason is NGO reporting. Groups that investigate manufacturing or supply chain-related brands’ shortcomings are now also following the money and naming and shaming banks that underwrite unethical businesses. These signals have created a general understanding among financial institutions that they are expected to prioritise addressing slavery.
Banks have regarded this shift as one more worrying risk to mitigate. However, banks that want to lead in the fight against slavery are also regarding it as an opportunity – the opportunity to use their expertise to defeat human rights abuses. Leading banks do recognize their distinct advantage in effectively tackling this heinous business. By following the money, abusive situations can be unveiled and more intelligence collected; traffickers can be hit at the core of their motivation – high profits; and banks’ transaction statements can help lawyers collect proof against trafficking charges, increasing the conviction rate of what is still a very low-risk crime.
How are leading banks making a difference in the fight against slavery? One proven way to effectively tackle trafficking is forging partnerships with like-minded banks, and with law enforcement agencies. A recent report issued by the Royal United Services Institute (RUSI.org) explores these alliances in more detail.
One well-known example is the U.S. Bankers’ Alliance, a working group comprised of several international banks started in New York City and spearheaded by the Manhattan District Attorney’s Office and Thomson Reuters. Reviews have stated that the group’s “red flag” guidance paper, released by the group along with the U.S. Department of Treasury in 2014, triggered banks’ enhanced due diligence for new clients, better internal staff training, an increase in Suspicious Transaction Reports activity and support for trials that result in convictions for trafficking.
Following the U.S. Working Group, Thomson Reuters and Europol launched the U.K. Bankers’ Alliance in 2015. This group, and the 2016 Joint Money Laundering Intelligence Task Force (JMLIT), are two examples of banks’ public-private partnerships to address trafficking within the United Kingdom.
In Asia the Mekong Club, a Hong-Kong based anti-trafficking organisation, continues to facilitate dialogue among leading banks around the role finance can play in addressing trafficking in Hong Kong and the Asia-Pacific region. As part of its Financial Services Working Group, the Mekong Club recently released its guidance document, Modern Slavery: A Resource Guide for the Banking Industry, and launched the workshop series Modern Slavery: A Training for Relationship Managers.
The first of this training series was delivered at the Innovation Lab of Commonwealth Bank of Australia in February. Matt Friedman, CEO of the Mekong Club and Steve Farrer, the head of information strategies at Liberty Asia, guided an audience of relationship managers, risk/compliance officers and other professionals from several international banks. The three-hour workshop covered slavery statistics, cases of modern exploitative situations, references to typology sources, and an overview of the initiatives undertaken by the financial industry.
This training, and the accompanying resource manual, are direct results of our association member banks’ engagement. Member banks expressly requested better training for banking professionals in Asia and actively participated in the reviewing process of the guideline resource manual. This engagement and commitment shows that the financial services community in Hong Kong is following the trend of banks worldwide and is aware and ready to address human trafficking through joint action.
This declared commitment is one step toward achieving results. However, the road is still long and steep. Trying to disrupt slavery in Asia-Pacific means striving to tackle a hidden business that exploits 30 million (66% of the total 45.8 million) victims in countries where several extended supply chains root their bottom tiers in unregulated dynamics, national anti-trafficking regulations are weak or nonexistent, and corruption and social issues make this crime thrive.
Banks in Asia should look at this challenge and keep in mind the opportunities that come with embracing it. Many will be business-related, such as avoiding fines, enhancing regional business opportunities, securing customers’ loyalty and protecting reputations. But the greatest opportunity is to play a vital role in identifying cases and disrupting trafficking trends, contributing to helping millions of lives and preventing others from being stolen.