September 27, 2022

Anti money laundering is important for many reasons but crucial is that dirty money is usually generated from ‘dirty’ economic activities. The underlying reason for many ‘financial economic crime fighters’ is the desire to do something meaningful in combating these crimes. When dealing with money, people often forget this and are not aware of (or try to ignore) the illicit activities that generated the money in the first place.

One of these underlying crimes that has been in the news recently is modern slavery and related to it and connected with it: human trafficking. A recent article by PassFort gives an overview with some links and describes how people are taken by force, threat or deception and are transported to another location – often another country but sometimes to a remote location like Marta’s Vineyard by politicians where they are exploited in one way or another.

CDD and AML usually follow regulations, internal policies and guidelines without paying specific attention to or analysts being aware of the specifics that could indicate a link between the customer and transaction under review with proceeds from modern slavery or human trafficking. Our partner GRC Solutions held a webinar on the topic of which the recording can be found here < > which gives some good insights but insight is not enough.

Some modern slavery is obvious but there’s a gray zone as well, combined with a different view on migrant labour. Maybe in Europe or the US it’s not acceptable to house migrant workers in dormitories, with shared bed- and bath-rooms but that is well accepted in for instance the UAE leading to many discussions in the western world about participation in the world cup in Qatar. In the world of AML/CFT we follow government regulations but more and more financial institutions start to think about their moral obligations and would go further and be stricter than what governments tolerate and accept. For instance refusing to deal with companies recruiting foreign labour at exorbitant fees or employers that make it a habit to confiscate passports of foreign workers.

Organizations – and not only financial institutions but also law firms, accountants, corporate service providers and payroll service companies – need to start with two things.

Training

Everyone involved in client onboarding, review, transaction-handling or -monitoring needs to be aware of the issue. That’s maybe easier said than done but analysts, customer service staff, transaction processing employees and relationship managers need to have a basic understanding of AML/CFT and the predicative offenses behind money laundering, their characteristics and typologies. Awareness across any financial institution is key.

Process review

Regulations are generic in nature, internal policies translate these for an organization but what staff do in dealings with customers is determined to a large extent by knowledge, expertise (which are largely driven by training) and operational procedures and processes. It’s of crucial importance to not take these for granted. It’s imperative to review these regularly and test if the processes are executed efficiently and effectively.

Modern slavery is everywhere as can be found here let’s not forget that and make sure it’s given the right attention in client onboarding, CDD and transaction processes.

Review your operational AML/CFT processes regularly and ensure all staff are adequately trained. If you need help with that you know where to find us.