New Report Identifies 11 Indicators of Modern Slavery Risk

Based on an analysis of globally prosecuted cases of modern slavery, FairSupply Analytics has identified 11 indicators to help FIs detect modern slavery.

FairSupply Analytics has released a new discussion paper encouraging financial institutions to “follow the money” and enhance their understanding of transaction patterns that indicate a high risk of modern slavery.

Modern slavery is estimated to generate over USD 150 billion in illegal profits per year. Yet, financial transactions used to fund modern slavery are often overlooked, and are only now beginning to gain momentum within financial crime divisions of financial institutions, the paper says.

Based on an analysis of globally prosecuted cases of modern slavery, FairSupply Analytics has identified 11 indicators that it says should be red flags to all financial institutions and law enforcement agencies as they work to detect and assess the risk of transactions linked to modern slavery.

Examples of the red flags include: multiple workers being paid into a single bank account; or deposits into customer accounts primarily coming from third parties in the form of cash deposits. These are all small clues, but when pulled together provide a framework for investigators to follow-up, the FairSupply Analytics says.

The paper argues that financial tracing – with the cooperation and diligence of financial institutions – can be an effective tool to detect and prevent certain types of modern slavery, notably the online sexual exploitation of children (OSEC) through fee-based Internet streaming services.

OSEC characteristically involves a direct electronic financial trail between the end-user (offender) and the ‘on-the-ground’ exploiter of the young person who is directly responsible for carrying out the sexual exploitation.

According to the paper, diligent monitoring and investigation of small transfers between apparently unrelated persons to known OSEC hotspots, such as the Philippines, is one of the most effective methods of financial tracing being used to combat this activity.

While considerable work has been done to understand the financial typologies linked to OSEC, Fair Supply believes that until now, there has been no consolidated research of any granularity which could help investigators and financial institutions know where to look to identify risk in modern slavery.

“Transparency is the greatest tool we have to help combat modern slavery,” says Kim Randle, Founder and CEO of Fair Supply. “We believe that analysis of data and trends is the best way to shine a light on the clandestine and complex nature of modern slavery.”

“It is an increasingly rigid expectation, with both legal and ethical dimensions, that private financial institutions be vigilant, and even proactive, in identifying and acting upon ‘red flags’ that may indicate that their banking infrastructure and funds transfer facilities are being used for such criminal activity.”

A copy of the full report is available here.

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