40 million people have been estimated as victims of modern slavery globally as about $150 billion in illicit proceeds being generated yearly. The proceeds of crime have been very much a focus for financial institutions for the last few decades and systems and controls have been put in place by banks to curb money laundering and terrorist financing. Banks have played an important role in targeting a number of specific issues and one area where they have added particular value is regarding the fight against Modern Slavery. Many large, international financial institutions have made plain their commitment to fighting Modern Slavery and here we discuss current and future solutions. The availability of solid financial intelligence against criminals involved in Modern Slavery takes pressure off victims and provides greater opportunities for bad actors to be brought to justice. As strong and reliable as it is, financial intelligence is not without its limitations. Transactional data can be very difficult to interpret. Financial institutions collect vast volumes of information and data about their customers and their customers’ transactional activities. The challenge that these institutions face is that most of this information is monitored through processes which are rules-based and may focus on flagging transactions of a certain size, frequency or destination. This rigid approach can make it difficult for financial institutions to identify patterns and detect signs of Modern Slavery.
Machine learning and artificial intelligence (“AI”) capabilities could vastly improve the ability of banks to identify, report, and ultimately prevent or disrupt Modern Slavery. These advanced technological solutions are available now. Early adopters are taking advantage of these tools to better identify the red flags associated with Modern Slavery. Advanced technology can examine all available data and identify patterns of cash or wire transfers at particular times, in or around geographical areas associated with ‘red-light districts’ or human trafficking, and simultaneously check for any links between account holders and beneficiaries of payments, and any allegations of their involvement in Modern Slavery crimes. Government policy recognizes that the current AML regime, of which financial institutions are a critical part, could function better. One solution to this problem has been the introduction of public-private partnerships where law enforcement, financial institutions and NGOs work together to exchange and analyze information relating to money laundering and wider threats. This public/private partnership model is growing in popularity around the world.
An early example of this in relation to Modern Slavery occurred in 2013 in the US. The Manhattan District Attorney’s Office and the Thomson Reuters Foundation sponsored an initiative to address Modern Slavery. The initiative pulled together a number of financial institutions, the Human Trafficking Pro Bono Legal Center, and the US Immigration and Customs Enforcement agency to assist the financial institutions in identifying transactions by suspected traffickers, share financial and technical expertise and discuss cross-border approaches to combatting Modern Slavery.
In the UK, banks have liaised with law enforcement regarding human trafficking issues since at least 2014. This was put on a more formal footing following the establishment of the Joint Money
Laundering Intelligence Taskforce (“JMLIT”) in 2015, which brought private sector banks and UK law enforcement together in a public/private information sharing partnership.
Governments, financial institutions, policymakers, lawyers, law enforcement agencies, technologists and data scientists should build on the momentum developed through partnerships like JMLIT to brainstorm creative solutions to this fundamental problem that balance the need for financial intelligence against legitimate and fundamental privacy interests.