Combating the $150 Billion Problem – What Compliance Can Do About Human Trafficking
/This is a guest post written by Ramsey Kazem, East Coast Vice President of Spark Compliance Consulting.
Last month, the City of Atlanta hosted Super Bowl LIII. A sporting event of this magnitude brings a lot of energy and excitement to the host city. This year was no exception. In the days leading up to the “big game”, the City of Atlanta showcased spectacular parties and special events, a diverse range of music concerts, and countless celebrity sightings. While there was much to celebrate, this event also brought with it a darker side and highlighted an issue that does not receive the attention it deserves: Human Trafficking.
Just days before the Superbowl, authorities announced that 33 people were arrested in Atlanta on sex trafficking charges. This roundup was the result of a cooperative effort between the Department of Homeland Security, the FBI and local law enforcement. The details of the arrests are undisclosed as the investigations are ongoing, but it has been reported that at least four victims have been rescued as a result of the effort.
Sadly, this issue is not limited to major sporting events where big-spending tourists from across the globe gather in one location. Indeed, sex trafficking, human trafficking and forced labor (collectively referred to as “human trafficking”) are far more prevalent than many realize. Human trafficking extends to all corners of the world –even to developed nations – and targets men, women, and children. This global scourge, commonly referred to as Modern Slavery, generates $150 billion a year in illegal profits making it the third largest criminal industry behind drugs and arms trafficking.
The International Labor Organization estimates that there are 40.3 million victims of human trafficking globally. One in four victims are children, and more than 16 million people are exploited in the private sector throughout a wide range of industries. While governments around the world are beginning to address this issue with increased urgency, commercial enterprises can play an important role in combatting this evil. That is, by ensuring their business activities are not indirectly supporting, encouraging or financing Modern Slavery, companies can substantially diminish the market for this illegal and immoral practice.
Before discussing the proactive steps to mitigate the risk of human trafficking in a company’s business activities, it is important to first understand what it is and in which industries it is most prevalent.
What is Human Trafficking? While the legal definitions of human trafficking tend to be broadly worded to cast as wide a net as is practicable, at its core human trafficking has three primary elements: (1) the transporting of people, (2) by illegal means, and (3) for a specific purpose. For example, the Trafficking Victims Protection Act of 2000, a United States Federal Law, defines each part of the formula as follows:
Transporting: the recruitment, harboring, transportation, provision or obtaining of a person
Illegal means: use of force, fraud, or coercion
Specific purpose: involuntary servitude, peonage, debt bondage, slavery or commercial sex acts.
Other laws and regulations addressing this issue take a similar approach to define this term.
No discussion on the definition of human trafficking is complete without dispelling the common myth that human trafficking only involves the transporting of people for commercial sex. This is simply not the case as forced labor is a large part of this illegal industry. In fact, by some estimates, there are more instances of labor trafficking than sex trafficking.
Where does it exist? Human trafficking exists all over the world and across a wide range of industries. While human trafficking is most prevalent in Africa, Asia, and the Pacific region, countries in Europe and North America are not immune to this issue. Moreover, with an increasingly global economy, consumers and companies are unknowingly and indirectly supporting this criminal industry through their purchasing and business decisions. Indeed, the United States Department of Labor has identified 148 goods from 76 countries made by forced or child labor. The list includes common items including electronics, textiles, cotton, food items, diamonds, leather, fruit, and toys.
In addition, while it is no surprise that human trafficking is often linked to underground or illegal activities such as prostitution, escort services, illicit massages, pornography, peddling and panhandling, it is also prevalent in non-criminal, commercial industries. The commercial industries that present a high risk of human trafficking include manufacturing, construction, hotels and hospitality, bars, restaurants and food services, adult entertainment, domestic work, landscaping, forestry and logging, and health care.
Taking a Stand Against Human Trafficking. Human trafficking is not a problem that exists only in distant regions of the world or in connection with certain illicit activities. It is a global problem that infects many industries here in the United States and abroad – and it is difficult to imagine a company that does not have some risk of supporting (directly or indirectly) this illegal practice through its business activities. So, what should a company do to address this risk?
The first step is to recognize that this is not just a law enforcement matter, but that commercial enterprises can play an important role in combatting this issue. In fact, depending on where a company (e.g., California, U.K., etc.) does business or with whom (e.g., United States Federal Government and others), a company may already be required to take affirmative action to address the issue (see, California Transparency in Supply Chains Act, U.K. Modern Slavery Act, Federal Acquisition Regulations, etc.). As an initial matter, therefore, a company must have a complete understanding of the applicable laws and regulations so it knows with which specific standards it must comply (if any). But knowing the legal landscape does not end the analysis. It is only the beginning.
A company should not limit its effort to eliminate the risk of human trafficking in its business activities to what the law requires. Moreover, companies that are not currently subject to a legal standard addressing human trafficking should not stand idly by waiting on some legislative or regulatory body to act. Instead, companies should take proactive action to mitigate this risk. Not only is this the right thing to do, taking affirmative action against this issue will set an example that others in your industry will likely follow. If not, your company will now have a major competitive advantage as it can proudly promote its ethical business practices in a way the others in the industry cannot.
Here’s what you can do in your program to combat human trafficking:
Risk Assessment. A company should evaluate its business activities and identify and rank the ones that expose it to human trafficking risk. In identifying the activities to assess, a company should take a holistic approach and not limit its review to only those activities that directly relate to its products, services or supply chain. Focusing only on these activities, while important, could potentially ignore other high-risk activities that support the business’s day-to-day operation. For example, does the company contract with a:
Cleaning service to clean its offices?
Food vendor to service its cafeteria or cater special events?
Landscaping service to maintain its premises?
Laundry service to launder employee uniforms or other linens?
Contractor to perform painting or construction services?
Business apparel company to provide employee uniforms or promotional t-shirts?
Taking a big picture view of all the company’s business activities will ensure the company develops an accurate profile of its human trafficking risk.
Third Party Due Diligence. Most companies already have a third-party due diligence process in place. This process should be enhanced or updated to address human trafficking risk for a company’s high-risk third-parties. For example, due diligence questionnaires and screenings should include targeted inquiries as to how the third-party has assessed and addressed its human trafficking risk in their business.
Training and Communication. A company should address human trafficking in its employee training programs and communications in accordance with the results of its risk assessment. Employees in high-risk business activities will likely require targeted training, while others may only need a general overview and introduction to the issue. In addition, a company should develop a specialized training program for those employees that are in high-risk environments on a regular basis. For example, a company with employees who frequently travel through airports, bus and train stations, and stay in hotels, should receive training on how to detect and report suspected incidents of human trafficking.
Third-Party management. A company should actively manage its human trafficking risk in its third-party relationships. For example, a company should require annual certifications, impose certain contractual provisions and mandate training for its high-risk third-parties. In addition, where appropriate, a company should consider making site visits and engage with the third-party’s employees to ensure there are no red flags or questionable practices.
Elevate the Issue within the Compliance Program. A company should leverage its compliance program to elevate human trafficking as a priority issue. Specifically, senior management must champion the issue, the code of conduct must explain how to address the issue, policies and procedures must prohibit high-risk activities that contribute to the issue, training programs and communications must educate on the issue, internal controls must be developed to mitigate the risk of the issue, and any red flags related to the issue must be reported, investigated and remediated.
Human trafficking is the third largest criminal industry in the world generating more than $150 billion in illegal profits, per year. Private industry can play an important role in combatting this issue. By taking a proactive approach and incorporating some of the above discussed best practices, private industry can take the lead in eliminating this scourge from commercial transactions – and, in so doing, reduce the overall demand for this illegal practice.
