Finance professionals vs modern day slavery

LESLEY JOHN

ACCA Marketing and Media Relations Manager

Over 40 million people are modern day slaves according to figures compiled by the United Nation’s International Labour Organisation and the Walk Free Foundation, a human rights group.

Modern day slavery is often looked at as a problem with more prevalence in developing nations but in reality it’s a problem that is being faced worldwide. This widespread industry is a profitable criminal industry that impacts industries from agriculture and garment manufacturing to private homes.

Modern slavery is an umbrella term that encompasses human trafficking, forced labour, debt bondage, forced or servile marriage and the sale and exploitation of children.

The US department of state recently published the 2018 Trafficking In Persons (TIP) Report which detailed some of concerns regarding trafficking across the Caribbean.

There have been changes in the tier placements, which is based on the extent of government action to combat trafficking than on the size of the country’s problem.

There are no countries currently classified into the lowest rank, Tier 3; whose governments do not fully meet the TVPA’s (Trafficking Victims Protection Act of 2000) minimum standards and are not making significant efforts to do so.

Aruba, The Bahamas and Guyana were the only Caribbean countries appraised as Tier 1 as their governments are deemed fully compliant with the TVPA’s minimum standards. However no tier ranking is permanent and every country, including other Tier 1 ranked nations across the world like the US, UK and Germany, can do more to maintain and continually increase efforts to combat human trafficking.

Human trafficking remains one of the fastest growing illegal enterprises in the world. The International Labour Organization (ILO) estimates human trafficking earns traffickers around $150 billion a year – a staggering amount that showcases how human trafficking translates into money laundering.

But where and how can accountants counter this illegal activity? What part do they play? Well, ACCA accountants across the Caribbean – indeed the world – play an important role in deterring human trafficking throughout the region. After all, professional accountants have a responsibility to support anti-money laundering initiatives, which firmly puts the finance profession on the front line in tackling this crime. We are the first line of defence in such instances.

In the case of ACCA members, they are obliged to report suspicions of money laundering and terrorist financing (including overseas terrorism, and carry out and maintain records of the compulsory internal staff training on money laundering.

These professionals also have to appoint a money laundering reporting officer to take responsibility for all the procedures, documentation and training; and, have appropriate preventative policies and procedures in place.

They are also advised on the signs to look for. These could include a sudden and unexplained drop in income of a cash business after a change in ownership, clients using a number of bank accounts, an increase of cash deposits or unexplained third party payments. There are strict penalties for accountants who don’t report their concerns as they cannot wilfully or naively ignore obvious signs of human trafficking.

The fight against human trafficking is a war, especially because the number of prosecutions of human traffickers is alarmingly low. According to the 2018 TIP report, there were only 17,880 prosecutions and 7,045 convictions for trafficking, and five new or amended legislation globally in 2017.

Finance professionals must use their experiences, in addition to talking to law enforcement agencies to make the connection between the act of money laundering and the source of the income.

There are three aspects to money laundering, known as placement, layering and integration.

Placement is the transfer of the actual criminal proceeds into the financial system. That could be through the purchase of a single premium life policy or a work of art.

Layering is a smokescreen created to distance the illicit funds from their source through layers of real or imagined transactions and/or organisations, designed to hide the trail and provide anonymity.

Integration is where the funds come back into the financial system as if from normal business transactions or as investment funds to purchase legitimate assets, eg the work of art is sold and the proceeds reinvested in a business, which may or may not be legitimate.

Even if a business appears to only operate in one country, its supply chains will cross borders. And selling products or services that rely on human trafficking has financial implications as well as legal and moral ones. Building a culture where everyone knows what to look out for, and how to report it, is key to good governance in this area

Human trafficking destroys the lives of the people exploited in this crime, and as long as finance professionals come together to look out for these signs and uphold their ethics, they can help to reduce and eventually put an end to human trafficking.