Money drives modern slavery. Each year modern slavery and exploitation generate profits of at least half a trillion dollars for its perpetrators. It is a low-risk, high-gain crime where money is used both as a means to control victims and to line the pockets of the criminals.
Financial institutions such as banks, credit unions, insurance companies and investment institutions have a vital role to play in tackling modern slavery. Yet few have a good understanding of how to play this role.
Is your organisation part of the problem of modern slavery? It might be investing in or lending to unethical organisations.
You’ll have mechanisms in place to guard against money laundering, but do these include indicators for modern slavery?
You’ll have due diligence processes, but are they designed to pick up signs of exploitation?
And is your organisation ready to help survivors of modern slavery access financial services they need to get back on their feet?
Financial control vs financial exploitation
Money is behind all cases of exploitation and it is used to control victims in different ways.
Financial control: this is where money is used to keep a victim in an exploitative situation, for example:
- Debt bondage – where an individual is forced to work to pay off debt.
- Where someone has limited access to their own money.
- Where a person is forced to work for little to no pay.
- When someone is unable to leave a situation, having no money for travel or alternative accommodation.
Financial control is the second most prevalent control method used by exploiters in situations of modern slavery, according to figures from Unseen’s Modern Slavery & Exploitation Helpline.
Financial exploitation: this is when money is the primary driver of exploitation rather than just a tool used to control someone. Signs of financial exploitation include:
- A victim transferring all or a substantial part of their wages to someone else.
- A victim’s earnings being paid into a bank account with a different name.
- Numerous individuals having access to a victim’s bank account.
- A victim being accompanied to a cashpoint to withdraw money, or to a Jobcentre to set up universal credit.
Cases of financial exploitation being reported to Unseen’s Modern Slavery & Exploitation Helpline are increasing.
Case study: how bank cashier Martina spotted a case of financial exploitation
Customer service staff are in a prime position to spot the signs of financial exploitation.
Martina*, a customer service assistant at a bank, was approached by someone wanting to set up an account. The customer, who didn’t speak English, was accompanied by a distant relative acting as a translator.
When Martina took the customer’s details, she found they already had an active account with the bank. However, some information supplied for the new account, such as surname, address and phone number, didn’t match the details on record.
When Martina queried this, the companion quicky became aggressive and argumentative. The customer appeared to be frightened, as if they might be in trouble.
Martina noticed other discrepancies, too. For example, the customer claimed the existing account was used to send money to family abroad, yet no international payments had been made.
After the customer left the bank, Martina reported the situation to the Modern Slavery & Exploitation Helpline. They offered guidance on what to do if the victim returned.
A Helpline Advisor also gathered enough information to be able to refer the case to the local police and National Crime Agency for a possible investigation of organised criminal activity.
*Name changed to protect identity. Image posed by model.
What does modern slavery in the financial industry look like?
When addressing modern slavery, the financial industry needs to look at a number of areas: lending and investing; illicit financial flows; due diligence processes; and survivors seeking access to financial services.
Lending and investing
Financial institutions have responsibility – and power.
They have a responsibility to look beyond their in-house operations to understand where their money is being invested and the activities it is facilitating. Through pensions, investment funds and lending, institutions may be directly or indirectly funding modern slavery practices.
And they have power – by considering modern slavery in decision-making processes and prioritising collective action, institutions can recognise their global impact and drive systemic change.
Plus, new duties are on the horizon. Although some details remain to be clarified, the EU Corporate Due Diligence Directive will have a big impact on the financial industry.
Detecting and disrupting illicit financial flows
There are vast amounts of money associated with modern slavery and exploitation, and somehow this money has to cross over to the mainstream economy. Financial institutions are the bridge.
Data is key here. Situations of modern slavery are more likely to be identified through patterns of data than because of one suspicious transaction.
Various tools have been created that enable financial institutions to spot key indicators of modern slavery. These are continually being updated as methods of exploitation evolve.
The RedFlag Accelerator, for example, provides a set of indicators to help businesses spot cases. It’s a tool that can be used across an organisation, from retail to financial investigations.
Data is also important to survivors of modern slavery. Where financial institutions provide data as evidence of exploitation, this can help individuals secure better justice.
Due diligence
Whatever the industry, your business can be affected by modern slavery through both your own operations and your supply chains.
Strong leadership and governance in the financial industry are fundamental to tackling modern slavery, and ensuring all your internal policies and procedures consider modern slavery.
Policies should have clauses specifically referencing modern slavery, with effective processes for escalation and remediation, and training for high-risk teams.
Investors and financial institutions should be regularly conducting risk assessments of their supply chains and investment portfolios.
Case study: Due diligence might have saved Freddie from exploitation
Freddie was financially exploited by a “friend” for several years when inadequate due diligence processes allowed him to slip under the radar as he took up a new job.
When starting work on a construction site, Freddie shared with the construction company copies of his identity documents and bank details for an account that a friend had set up for him, ostensibly to help him get better with his savings.
The friend said Freddie’s wages would go directly into an ISA, and that therefore Freddie would have limited access to the money.
For more than four years Freddie received £50 a week from his wages. Often he was unable to buy food. Finally, he called the friend to ask for access to his savings. His friend became angry, hung up and blocked his phone number.
Freddie called the Modern Slavery & Exploitation Helpline to report his situation. The Helpline team reported the case to the police, and Freddie has now been entered into the National Referral Mechanism – the Government system for supporting people identified as likely victims of modern slavery.
Freddie might have been spared this experience if there had been thorough checks on employees’ details when he started his job.
For example, a protocol for checking home address, next of kin, phone number, and bank details can raise red flags such as the same details being shared by numerous employees, or someone’s wages being paid into another person’s bank account.
Supporting survivors
Financial institutions can help to combat modern slavery by supporting survivors seeking access to financial services.
For someone who has been exploited, financial services are often a key step to reintegrating into society.
Having a bank account, for example, could help an individual with independence, stability and employment opportunities. This in turn can help reduce the risk of re-exploitation.
But many survivors face barriers when they try to open a bank account. They may lack physical identity documents, encounter language barriers or have poor credit rating, for example.
Financial institutions can work with organisations that support survivors of modern slavery and exploitation to:
- Ensure help is clearly signposted
- Review internal policies to address barriers that survivors face
- Prioritise modern slavery training for all staff.
How Unseen can help financial institutions
Unseen’s Business Services experts can support your business to tackle modern slavery in finance. Here are a few ways we can help:
Training
We offer bespoke training for businesses. Whether you want to find out more about modern slavery in the finance industry, train your staff on how to spot the signs, or would like modern slavery training for a specific team, we can tailor training to your needs.
Risk assessment
Conducting a risk assessment will help you identify where your highest risks of modern slavery and human rights abuses lie, whether that’s across your internal operations, supply chains or investment portfolio. We’ll work with you to address your highest risks, and develop bespoke action plans to boost engagement and reduce your risk.
Collaboration
Collaboration is crucial for long-term systemic impact. Become a member of our exclusive Finance Hub, where you can openly discuss challenges facing financial institutions, best practice examples and how to mobilise the sector to tackle modern slavery effectively and collaboratively.
To find out more, get in touch at [email protected].
