On October 19, the Embassy of Liechtenstein and the Center for Strategic and International Studies (CSIS) hosted an online panel discussion titled “Mobilizing Finance Against Modern Slavery.” The discussion focused on what the financial sector can do to fight the financing of human trafficking and modern slavery. The talk featured James Cockayne, the Head of Secretariat of the Liechtenstein Initiative for Finance Against Slavery and Trafficking (FAST); Amy Lehr, Director and Senior Fellow of the Human Rights Initiative at CSIS; and Eric Lorber, Senior Director of the Center for Economic and Financial Power. The event was moderated by Heather Conley, CSIS Senior Vice President for Europe, Eurasia, and the Arctic; and Director, Europe Program.
James Cockayne highlighted aspects of FAST’s Blueprint, which provides a collective-action framework to help address the issue of human trafficking and modern slavery affecting an estimated 40.3 million people worldwide, from the apparel sector to agriculture to entertainment, resulting in a $150 billion illegal industry. Cockayne pointed out that by addressing vulnerabilities to investment portfolios and supply chains, the financial sector can collectively leverage changes to business practices through various goals and actions entailed in the Blueprint, which also contains a Toolkit for implementation. In addition, the Association of Certified Anti-Money Laundering Specialists (ACAMS) has partnered with FAST to offer a free online training course to help identify the financial footprints of modern slavery and human trafficking and provide participants a framework to help mitigate and remedy these risks.
Amy Lehr emphasized that as financial institutions have many business relationships, it will be important to use big data to manage the scale. She said technology will be an essential element in developing a solution. Things like blockchain or distributed ledger technology can be helpful in understanding the entities involved in supply chains and patterns, but they do have limitations, such as not being able to factor in social conditions. Lehr also mentioned how FAST not only seeks to address stopping the flow of money to fund human trafficking, but also seeks to change the underlying background conditions that lead to it. This is seen in FAST’s focus on encouraging financial institutions to provide micro loans, which will offer financial alternatives to individuals who may fall into the traps of human trafficking.
Eric Lorber talked about how the FAST initiative not only applies to financial institutions but also to businesses and corporations. There is a supply-chain risk to human trafficking and many businesses are becoming aware of this, especially if they are vulnerable to violating sanctions. The US Treasury Department has been focused on illicit finance related to human trafficking. Lorber agreed that new technologies will help in raising awareness. It is important to get out in front with information sharing so that the private sector can better understand the risks. Currently this is difficult due to constraints the intelligence community has in sharing information and cases they are investigating.
Adding to Lorber’s comments, Cockayne said human trafficking and modern slavery is a market failure, the cost of which has not been recognized like environmental costs. He added that investors and pension funds can play a large role in this effort. If investors demand ethical and responsible business models this will put pressure on corporations to make sure their supply chains are in compliance and not involved in ways that contribute to human trafficking. Lehr added that many financial institutions are unaware that they are supporting human trafficking and modern slavery. Lorber said that the financial sector is trying to do the right things, but the challenge will be how to identify illicit activity and stop it.
Cockayne said it will be essential that there is a legislative framework to give incentives for businesses to ask questions. It requires leadership from the government. Financial institutions cannot solve this on their own. Governments must look at the social and economic costs of human trafficking and modern slavery, such as how it impacts criminal justice, the public health system, reduces productivity, increases corruption and decreases innovation.