Anti-Money Laundering News and Information

FAST: Banks urged to report customers suspected of human trafficking

The founder of an organisation dedicated to the eradication of modern slavery says careful and compliant reporting of suspicious transactions by banks would deliver a tremendous boost to stamping out crimes such as human trafficking, while banning whole industries risks merely forcing the problem underground.

James Cockayne, the founder of the Liechtenstein Initiative for Finance Against Slavery and Trafficking (FAST), conceded that the crime of human trafficking cannot be eradicated solely through compliance with Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Rules, but says the value of complete reports should not be underestimated.

“It would go a long way, but it wouldn’t end it entirely because there are some aspects of modern slavery that occur outside of the commercial context and many not show up in transactions data,” Professor Cockayne said.

“But co-operation between payment and deposit-taking institutions and law enforcement can be really crucial.”

Financial institutions around the world were fined a collective $US10.4 billion ($13.5 billion) in calendar 2020 for AML/CTF breaches, with fines in the Asia-Pacific region rising 26 per cent to $US5.1 billion.

FAST notched up a significant victory last year when a group of investors including AustralianSuper and Fidelity, accounting for $5.9 trillion in assets, wrote to the top 100 ASX companies and demanded they scrutinise supply chains for exposure to slave labour.

The other part of FAST’s mandate is eliminating the heinous crime of human trafficking. It says human trafficking is the third largest global crime as measured by revenue, which means it can leave behind a large financial footprint for investigators.

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High-risk industries

Professor Cockayne, a research fellow at the United Nations University, says that although the agriculture and sex industries are among those most commonly associated with slavery and trafficking, many other industries are also at risk.

“There is also a focus on convenience stores, where there have been documented cases of wage theft because of the established links between wage theft, debt bondage and modern slavery,” he said.

“In Australia there are other high-risk industries such as the hospitality industry and the classic example used by AML regulators is nail bars and salons,” he pointed out.

“In NZ there are questions about the offshore fishing industry, but those are just things that are above the surface.”

Another part of the economy where criminals involved in slavery and human trafficking are thought to hide in plain sight are legal brothels and escort agencies.

In 2015, NAB decided the risks presented by the legal sex industry were too high and opted to boycott the entire sector, while continuing to cater to sex workers as individuals. It is the only big four bank to have made its position public.

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By James Frost, , January 4, 2021, published by The Australian Financial Review

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