Modern slavery is estimated to generate over $150 billion in profits annually and is one of the top three international crimes alongside drug trafficking and trade in counterfeit goods.

There are well over 40 million people in slavery around the world, while an estimated 130,000 people are exploited in the UK through forced labour, criminal exploitation and other forms of slavery. The recent economic hardship resulting from Covid-19 restrictions is likely to increase vulnerability to exploitation, and conflict -  including the war in Ukraine -  is generating hundreds of thousands of potential victims of trafficking and exploitation. It is more important than ever that businesses consider the ways in which they might unwittingly be linked to modern slavery.

In the UK, under the UK Modern Slavery Act (2015) businesses with an annual turnover of over £36 million are required to publish an annual statement setting out what steps they have taken to identify and tackle modern slavery. But this measure only goes so far in tackling this terrible crime. All businesses, including financial services, can play a vital role in going beyond compliance with the MSA to detect and disrupt modern slavery in their supply chains, in their business operations, and in their wider sphere of influence.

Environmental, Social, and Governance (ESG) is increasingly a key consideration for financial institutions, and while there has been a particular focus on environmental stewardship and climate change in recent years, the social and governance responsibilities are also gaining prominence. Understanding and managing how your organisation might be linked to modern slavery is both a social and governance issue: strong leadership and controls are needed to ensure that the real impact on workers and suppliers is understood.

Recognising and managing the salient and material risks to people and to businesses is likely to become more important as momentum builds behind tighter sustainable finance regulation in Europe and beyond. In recent years, we have also seen import bans on certain products related to modern slavery take effect.

The financial sector can manage its modern slavery risk in a number of ways:

• by detecting and disrupting suspicious activity across financial transactions
• by assessing the potential exposure to modern slavery and forced labour of investee companies
• by assessing the potential exposure through procurement activities, whether via contract labour agencies, or via sourcing goods for the office
• And lastly, banks in particular can play a vital role in supporting victims to avoid re-exploitation through financial inclusion.

This month (March 2022) a new anti-slavery digital learning tool for the financial services industry was launched by the UK government, the UK Independent Anti-Slavery Commissioner and Themis. This learning tool is free to use and provides guidance to all financial organisations, large or small. 

Together with the government we have developed this digital learning with the request that all financial institutions in the UK share it across their employee base. This is so that the whole sector gets the same level of information, resources and support, and so we can work collectively as part of a whole system response to tackle human trafficking and modern slavery.

There is a strong moral imperative for financial services to address modern slavery, but there is also a legal and regulatory requirement to do so. Under the Financial Conduct Authority (FCA) Vulnerability Guidance (FG21/1), modern slavery and human trafficking are recognised as life events that can make a consumer more susceptible to harm.

Financial services organisations need to ensure that their staff have the skills and capability to recognise and respond to the needs of individuals that are displaying indicators of vulnerability. This training will support firms to upskill their employees.

The UK anti-slavery digital learning for financial services was launched on 29 March 2022. For more information visit  https://themisservices.co.uk/msht and Hope.sherwin@themisservices.co.uk