OPINION: Britain's finance industry is floundering on modern slavery

by Sara Thornton | @UKAntiSlavery | UK Anti-Slavery Commissioner
Monday, 18 January 2021 14:00 GMT

ARCHIVE PHOTO: People walk through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson

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UK survey finds lack of awareness, training and engagement among senior finance managers on human trafficking

By Dame Sara Thornton DBE QPM, UK Independent Anti-Slavery Commissioner

Modern slavery entraps an estimated 40 million people globally. Generating US$150 billion in illegal profits annually, it is also one of the top three international crimes, alongside drug trafficking and trade in counterfeit goods. But while slavery is illegal in every country in the world, our economic and financial systems appear to tolerate and even promote practices which result in this abuse.

Because modern slavery is intertwined with money laundering and fraud, financial institutions should be at the heart of the global efforts to combat it. Banks should play a significant role in detecting and disrupting illegal money flows. Investors and lenders should ensure that their capital is not directly or indirectly supporting businesses that harm people.

However, practical efforts to address modern slavery exist only in pockets of good practice. High profile collaborations such as the Liechtenstein Initiative’s Blueprint for Mobilizing Finance Against Slavery and Trafficking or RUSI’s Leaning In point to the potentially huge role that financial institutions should play, but the message has not filtered down to everyday business.

This is underlined by a report that I’m publishing in collaboration with Themis and TRIBE Freedom Foundation, which reveals concerning levels of ignorance of modern slavery in the sector. Themis and TRIBE conducted a survey of 1,000 financial sector professionals and found that nearly half of senior managers were unaware that modern slavery existed in the UK, while 43% of senior management did not know if their organisation had a modern slavery policy, or confirmed that their organisation did not have one.

Further underlining concerns, more than two thirds of financial industry employees did not believe that the issue had been raised by senior managers more than a few times, if at all, in the last twelve months. And finally, a worrying 71% of financial industry employees stated that they had never participated in any form of anti-slavery training with their current employer.

This lack of activity is leading to systemic failures. Take  Operation Fort - the largest modern slavery case in the UK to date. The investigation identified 275 bank accounts from seven high street banks, with thousands of transactions.

Yet, despite suspicious activity at branches and ATMs, not one suspicious activity report (SAR) was raised until the institutions were contacted by the police. Lack of detection enabled the criminals to operate unhindered for years, causing immeasurable physical and psychological damage to an estimated 400 victims.

Like any other business, financial institutions with a turnover of £36 million or above, have a duty to map out, address and report on the risks in their operations and supply chains under the Modern Slavery Act. But as gatekeepers to capital, which is the lifeblood of commercial survival, they should not underestimate the positive influence that they could have on supply chains both at home and abroad. Financial institutions should be routinely using their leverage to engage with their customers on ethical labour issues, but, as the report points out, this is happening too infrequently.

How do we remedy this? If we are to make genuine progress, CEOs and senior management leaders must set the tone from the top of financial organisations, publicly committing to eradicating all forms of coercive labour practices. 

Wherever possible, anti-slavery elements should be incorporated into existing risk assessments and due diligence processes across the organisation. At every significant decision point or gateway, labour exploitation risks should be considered alongside other business critical factors. Investors should define a risk tolerance map, outlining their risk appetite and developing a set of action protocols.  This should be signed off by the board and include clear examples of when to withhold funds.

The government’s recent announcements that it is strengthening the Modern Slavery Act, launching a registry and introducing financial penalties for organisations that fail to comply with the legislation, should accelerate the trend to transparency. But reporting is not sufficient on its own and organisations must take action. Those that only pay lip service to the requirements face increasing risks to their reputations and operations.

The British Academy says that the purpose of business is to ‘solve the problems of people and planet profitably and not profit from causing problems’.  I am writing to 51 CEOs in the financial sector this week, asking them what further steps they are taking to address this urgent issue within their organisation and amongst clients, suppliers and investments.