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Accountants have a role to play in the fight against human trafficking


Wednesday, October 04, 2017

Over 20 million people across the world are effectively slaves, according to the International Labour Organization (ILO). Sadly, this could be a conservative estimate. Other organisations put the figure even higher — the Global Slavery Index 2016 estimates 45.8 million. Accountants have a role to play in reducing this number by taking steps to prevent human trafficking.

Human trafficking is defined as modern-day slavery, and it affects millions of adults and children around the world who are held for the purpose of sex trafficking, child sex trafficking, forced labour, bonded labour / debt bondage, domestic servitude, forced child labour and unlawful recruitment, as well as the use of child soldiers.

The US Department of State recently published the 2017 Trafficking In Persons (TIP) Report which detailed some of the concerns regarding trafficking across the Caribbean.

Alongside the concerns, the report shows there has been an improvement across the region as the majority of countries have improved their tier placements. Placement is determined by the actions taken by governments to meet the minimum standards of the Trafficking Victims Protection Act.

Tier 1 countries are those whose governments fully meet the minimum standards. Tier 2 countries are those whose governments do not fully meet the minimum standards, but are making significant efforts to bring themselves into compliance with those standards. Tier 3 countries do not fully meet the minimum standards and they are not making efforts to bring themselves into compliance with those standards.

The Bahamas and St Maarten are the only Caribbean countries appraised as Tier 1 in the 2017 report. Trinidad & Tobago, Jamaica and Barbados are appraised as Tier 2. It should be noted that a tier ranking is not permanent. Every country — including Tier 1-ranked nations across the world like the US, UK and Germany — can do more to maintain and continually increase efforts to combat human trafficking.

Still, with all the efforts of governments, human trafficking remains one of the fastest-growing illegal enterprises in the world. The ILO estimates human trafficking earns traffickers around US$150 billion a year — a staggering amount that showcases how this crime translates into money laundering.

But what role can accountants play to counter this illegal activity? Well, ACCA accountants across the Caribbean — indeed the world — play an important role in deterring human trafficking.

Professional accountants can contribute in the following areas:

• Demonstrate integrity and ethical behaviour in all areas – do not turn a blind eye to this illegal activity.

• Support anti-money laundering initiatives — this puts the finance profession on the front line in tackling this crime.

• Report suspicions of money laundering and terrorist financing (including overseas terrorism), and carry out and maintain records of the compulsory, internal staff training on money laundering. This is required of all ACCA members.

• Appoint a money laundering reporting officer to take responsibility for all the procedures, documentation and training; also implement appropriate preventative policies and procedures.

• Be aware of warning signs that suggest human trafficking. These could include a sudden and unexplained drop in income of a cash business after a change in ownership; clients using a number of bank accounts; an increase of cash deposits or unexplained third-party payments. There are strict penalties for accountants who don't report their concerns, as they cannot wilfully or naively ignore obvious signs of human trafficking.

• Use their experiences, in addition to talking with law enforcement agencies, to make the connection between the act of money laundering and the source of the income.

• Help to build a culture where everyone knows the warning signs and how to report it, paying special attention to businesses with supply chains that cross borders.

• Be proactive and know your customers and suppliers to avoid products or services that rely on human trafficking, thus avoiding financial, legal and moral implications.

As finance professionals engaged in this war against human trafficking, they must be aware of the three aspects of money laundering known as placement, layering and integration.

• 'Placement' is the transfer of the actual criminal proceeds into the financial system, such as using the proceeds of child labour to purchase a car or work of art.

• 'Layering' is where a smokescreen is created to separate the illicit funds from their source using various transactions that are designed to hide the trail, such as placing illicit funds in multiple legitimate investment accounts in various countries.

• 'Integration' is where the funds come back into the financial system as if from normal business transactions: the investments are encashed or the car or work of art is sold and the proceeds reinvested in a business, which may or may not be legitimate.

Accountants must play their role in this war against human trafficking, irrespective of the low rate of conviction. The 2015 TIP report states that there were only 10,051 prosecutions and 4,443 convictions for trafficking globally in 2014.

Human trafficking destroys the lives of the people exploited in this crime. Accountants have a role to play in reducing the number of people being exploited as slaves in human trafficking by coming together and looking out for signs of money laundering and trafficking while upholding the ethical standards of accountants.


Marlene McIntosh, FCCA, FCA is a chartered accountant and a member of Council of Institute of Chartered Accountants of Jamaica. She is the charter president of the ICAJ Toastmasters Club.