Targeting the International Anti-Money Laundering Regime to Address Human Trafficking and Forced Labour

Changing the anti-money laundering regime would bring important shifts in the global economy, resulting in less exploitation and fewer labour abuses.

A new report published today by UNU-CPR’s Finance Against Slavery and Trafficking (FAST) initiative argues that a small but significant change to the international anti-money laundering regime – the laws, regulations, and procedures used to tackle money laundering – could have enormous consequences for the fight against human trafficking and forced labour.    

Making knowingly benefitting from human trafficking or forced labour a predicate offense to money laundering, the report stresses, would close the gap between the billions generated from these crimes and the meagre compensation provided to its victims and survivors. This is a challenge that persists despite international law codifying remedy for human rights violations.

In addition to securing compensation, Asset Recovery and Restitution posits that changing the anti-money laundering regime would bring important shifts in the global economy, resulting in less exploitation and fewer labour abuses. The authors explain that once individuals or companies financially benefitting from human trafficking or forced labour understand their profits can be seized and confiscated, their risk calculus will change and they will be more likely to prevent and avoid supporting these crimes. 

“Millions around the world are trapped in situations of forced labour – and their suffering is perpetuated by an economic system that tends to overlook the mistreatment of workers because of the cost savings their exploitation secures for corporations,” argues co-author Andy Shen, Government and Multilateral Organizations Lead at FAST. He continues: “Making knowingly benefitting financially from human trafficking or forced labour a predicate offense to money laundering would send a clear signal to corporations and mobilize the financial sector to more effectively prevent and address abuses in their value chains.”

Asset Recovery and Restitution consulted 47 representatives from governments, multilateral organizations, the financial sector, and civil society to understand their involvement in efforts to secure compensation for victims and survivors, and the degree to which they cooperated with other agencies/entities to do so. The report reflects growing concerns about forced labour and human trafficking in global value chains and the lack of corporate accountability and remedy for victims and survivors.   

Human trafficking and forced labour are two of the world’s top sources of illicit profits. Estimates by the International Labour Organization, for instance, suggest that forced labour generates around $150 billion each year. But, this figure is actually much higher since it doesn’t reflect the illicit profits that corporations in the Global North earn through forced labour in their value chains.

Several key findings stand out from the report’s consultations. Only some representatives from ministries of justice and civil society organizations had supported legal or administrative proceedings to use seized assets or proceeds to compensate victims/survivors. Compensation was forthcoming in two and nine of these cases respectively. However, more encouragingly, the responses also revealed that agencies/entities had relevant capacity and experience to take on a more prominent role. A significant proportion had investigated proceeds laundered from human trafficking and/or forced labour, and a smaller number had supported efforts to freeze and/or seize assets/proceeds linked with these crimes. 

Several bodies/entities had also taken steps towards improving their capacities and ability to target assets/proceeds and provide remedy and compensation: some reported receiving or delivering training to strengthen investigations into illicit proceeds, and a smaller number had received training to support cases where assets could be frozen, seized, or recovered.

A further encouraging finding of the study suggested that a majority of respondents supported the idea of shared responsibility for the provision of compensation for these crimes – both from individuals/companies in the country where the worker was exploited and those in countries where tainted goods are sold. This demonstrates, potentially, a willingness amongst those government agencies that responded to hold corporations in market States accountable for the compensation owed to exploited workers.

“Although our findings confirm that only a few agencies/entities had supported efforts to seize assets and proceeds linked with human trafficking and/or forced labour, there are clearly also positives to reflect upon,” says Loria-Mae Heywood, co-author of the report and Research Associate for the FAST initiative. “Responses reveal that current capacities and experience can be leveraged to secure remedy and compensation for the victims and survivors of human trafficking and forced labour. Critically, there was also a widespread belief that individuals/companies benefitting from these crimes should be held accountable.”       

Asset Recovery and Restitution provides several pathways forward, outlining recommendations for policymakers. It suggests, for instance, that forced labour import bans in North America, and potentially in the European Union and elsewhere, provide a good source of information on the individuals/companies that may financially benefit from human trafficking and/or forced labour. Efforts are also needed to facilitate victim/survivor access to financial products and services, specifically bank accounts and the accounts of other regulated financial institutions, so they can securely receive their compensation.

The FAST initiative mobilizes the financial sector to address modern slavery and human trafficking, with the support of numerous project partners, including the Office for Foreign Affairs of the Principality of Liechtenstein, the Foreign Ministry of the Kingdom of the Netherlands, the Department of Foreign Affairs and Trade of the Commonwealth of Australia, the Norwegian Agency for Development Cooperation, and private sector and charitable donors.

Remedy is a central aim of the FAST initiative and the Asset Recovery and Restitution Initiative explores how the financial sector, through legal and policy reform and capacity building, can contribute to increased remedy for victims and survivors of human trafficking and forced labour.

Access Asset Recovery and Restitution here

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