In recent years, the international community has intensified its efforts against modern slavery. Notably, the last decade has seen a surge in antislavery legislation, cementing it as a vital element of compliance due diligence programs. This shift marks modern slavery as a significant predicate offense in criminal law.
Moody’s Analytics recently took the time to discuss how regulations are fuelling the fight against the scourge of modern slavery.
Prior to 2011, modern slavery was a relatively overlooked issue on the global stage. However, the release of the UN Human Rights Council’s “Guiding Principles on Business and Human Rights” in 2011 marked a turning point.
This voluntary framework spurred numerous countries, including the US, UK, France, and Australia, to enact mandatory human rights and modern slavery disclosure laws. The proliferation of such regulations has led to an increase in prosecutions, shedding light on the complexities surrounding modern slavery crimes and enhancing risk management strategies.
A key indicator of the increasing scrutiny of modern slavery issues is the rise in substantial penalties for non-compliance. For instance, in 2020, Australia imposed its largest corporate fine due to a failure in identifying risks associated with child exploitation. These stringent measures underscore the importance of robust transaction monitoring and KYC checks in combating child sexual exploitation.
Effective legislation, coupled with monitoring capabilities, is crucial in identifying human trafficking and forced labor within supply chains. Landmark legal reforms in countries like Pakistan and Australia have been instrumental in this regard. Pakistan’s 2018 Prevention of Trafficking in Persons Act led to significant prosecutions in human trafficking cases, particularly in addressing bride trafficking to China. Australia’s modern slavery act of 2018 exemplifies the proactive role companies must play in maintaining antislavery standards, as evidenced by the increase in corporate prosecutions related to modern slavery.
Despite progress, the lack of uniformity in sovereign regulations presents challenges in combating modern slavery, particularly in cross-border crimes. Often, crimes related to modern slavery are prosecuted under different labels, such as “professional misconduct.” Therefore, due diligence programs need a holistic approach, screening not only for modern slavery but also for crimes commonly associated with it. This broader perspective is key to effectively identifying and understanding associated risks.
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