EBF SUSTAINABLE FINANCE ROUNDUP ARTICLE 

Daniel Thelesklaf, Project Director, FAST, United Nations University Centre for Policy Research, on banks’ role in the fight against human trafficking

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BRUSSELS, 20 June 2022

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The banking sector can play a crucial role in assisting the international fight against human trafficking. The urgency to act is accentuated during times of conflict as traffickers target people in marginalised or difficult circumstances. Since last February millions of refugees from Ukraine have crossed borders into neighbouring countries. We asked Daniel Thelesklaf, Project Director of FAST (Finance Against Slavery and Trafficking), four questions to reflect on the actions which can be undertaken by individual banks, and banks collectively, to play their part in combatting human trafficking under the particularly difficult circumstances that have been afflicting the European region.

1. Against the current background of the ongoing war in Ukraine, what is being observed in terms of impact on organized crime and human trafficking across Europe?

The current crisis in Ukraine has displaced over 12 million people – over six million, predominantly women and children, have fled the country. Conflict-induced displacement often increases the risk of human trafficking and forced labour as refugees and displaced persons are inherently vulnerable and at risk of exploitation. Human trafficking was already a significant issue in Ukraine, even before the war started. Therefore, there was pre-existing infrastructure in criminal networks ready to exploit internally displaced people and those seeking to flee^[1].

Human traffickers target vulnerable demographics around the globe. The United Nations Refugee Agency (UNHCR) has declared a Level 3 emergency in Ukraine, the highest attributable level. Traffickers often target people in desperate situations, with refugees already at a higher risk for human rights violations. Traffickers can lure women and children into sex and labour trafficking using tactics like fraudulent travel and employment opportunities. According to news sources, criminals may be masking as volunteers and aid workers at the border, holding up signs offering accommodations and transportation services. Some sources also indicate that aid groups have reported the kidnapping of children and cases of human trafficking^[2].

2. What role can financial institutions play in addressing these pressing issues, which are being exacerbated by the current crisis?

The unprecedented response from the financial sector regarding the conflict is one of the few positive takeaways from this tragic situation and demonstrated the leverage the financial sector can have This is the epitome of ‘ESG’ that the private sector prioritizes upholding standards of good environmental, social, and corporate governance. .

A similar response should be applied to other serious human rights violations, in particular to any form of aggression or exploitation, wherever it occurs. Human trafficking is one of the most profitable forms of crime, globally generating at least US $150 billion yearly. Financial institutions are essential to combat human trafficking, as the information they collect and analyse can help identify traffickers. As set out above, in the context of the Ukraine crisis, refugees fleeing conflict-induced areas are inherently vulnerable to human trafficking. Raising awareness, implementing red flag indicators to identify specific suspicious money movements and customer behavior, and reporting such cases to the Financial Intelligence Units, are critical. Financial institutions must focus on using their anti-money laundering instruments to detect, promptly report and disrupt suspicious activity and avoid facilitating the use of proceeds of crime, with due regard to guidance to ensure unintended consequences.

Financial exclusion is also a factor that increases vulnerability to the risk of modern slavery and a consequence of the experience of being trafficked or exploited. While some displaced persons from Ukraine are likely to have limited access to finance for the first few weeks, the financial sector must provide continuous access to finance. The Finance Against Slavery and Trafficking (FAST) Initiative welcomes the 27 April 2022 call of the European Banking Authority to facilitate access to basic payment accounts for refugees, regardless of their citizenship, and calls on financial institutions to follow up.

3. For those who are not familiar with the FAST initiative, could you tell us what it is and how it helps mobilize the financial sector?

FAST is a multi-stakeholder initiative based at United Nations University Centre for Policy Research that works to mobilize the financial sector against modern slavery and human trafficking. Through its alliance-building approach, FAST works in partnership with public and private sector entities around the world, to end modern slavery and human trafficking.

The work started in September 2019 when FAST published Unlocking Potential: A Blueprint to Mobilize Finance Against Slavery and Trafficking (the ‘FAST Blueprint’). The Blueprint provides an extensive analysis of the challenges and opportunities for finance to address modern slavery and human trafficking and recommendations which align with the United Nations Guiding Principles on Business and Human Rights (UNGPs) and relevant OECD Guidance.

The recommendations are directed to financial sector actors – both public and private – which wish to address the issues of slavery and trafficking. These are framed in terms of 5 FAST Goals, against which the Blueprint identifies 30 Actions that should be undertaken to mobilize the financial sector. Additional opportunities to engage the financial sector have been identified in the meantime.

In addition, FAST works closely with survivors. Survivor experience and expertise help governments and financial sector actors understand where they cause, contribute, or are linked to exploitative business practices.

4. How can banks be willing to provide their contribution to join this initiative?

Banks have various options to support FAST, including supporting the broader FAST initiative or taking part in targeted initiative, such as the Survivors Inclusion Initiative (SII). The SII works with financial institutions and survivor support organizations to promote financial access to help prevent and remedy modern slavery and human trafficking. It launched in September 2019 in Canada, the UK, and the US and will expand to other jurisdictions. The SII brings together a dedicated coalition of financial institutions and survivor support organizations to facilitate survivors’ access to basic banking services, such as checking and savings accounts, and help them become full financial participants in their communities. Since the launch of the SII, participating financial institutions have opened over 1,500 accounts for survivor clients referred by participating survivor support organizations.

Banks can contribute to FAST’s series of anti-money laundering roundtables, where they can share their expertise and present case studies of suspicious activity that has been detected and reported. These typologies assist other banks in better identifying suspicious activity related to trafficking and modern slavery.

Banks are also encouraged to inform FAST of challenges encountered in implementing the Blueprint recommendations. FAST is committed to addressing those challenges, also using its convening power to bring together relevant stakeholders, while also providing a platform for banks to present their engagement and share success stories at FAST events.

For more information on how to get involved in supporting FAST and its efforts to address modern slavery and human trafficking, you can contact the organisation here.

^[1] https://www.state.gov/reports/2021-trafficking-in-persons-report/ukraine/

^[2] https://www.ungeneva.org/en/news-media/news/2022/05/ukraine-war-un-signs-framework-assist-survivors-sexual-violence

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For more information:

Alexia Femia, Financing Sustainable Growth Adviser, a.femia@ebf.eu

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