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Prioritising human rights in financial services

by Alexandra Cain | 16 Apr 2019
Australia is a key part of the push to stop the financial services sector enabling modern slavery across the global economy, with a UN-led group recently exploring this topic during a three-day consultation forum in Sydney.

The forum heard from a range of industry players, who examined the role banking and financial services can play in preventing businesses in the supply chain from being involved in practices that compromise human rights.

The UN’s figures indicate more than 40 million people were enslaved in 2016 and the proceeds from forced labour generate more than $150 billion a year.  

In September 2017 UN’s General Assembly launched the Call to Action to End Forced Labour, Modern Slavery and Human Trafficking with Australia, Liechtenstein and the Netherlands endorsing the pledge.

Subsequently, the global Financial Sector Commission on Modern Slavery and Human Trafficking, a public-private partnership that includes the Australia, was established to accelerate the financial service’s sector’s engagement in addressing these crimes.

The commission’s first consultation process was held in September 2018 in New York, looking at the sector’s approach to compliance and risk. The second consultation forum, on responsible lending and investment, was held in Liechtenstein in January 2019. The Sydney forum was an opportunity for the commission to learn from local and regional experts.

Fiona Reynolds is the chair of the Financial Sector Commission on Modern Slavery and Human Trafficking and CEO of the UN-backed Principles for Responsible Investment. 

Addressing the recent Sydney forum, which took place between 11 and 13 April, she explained the intersection between the financial sector and modern slavery has been less of a focus than for some other industries, but this is changing. “There is growing recognition that to identify and disrupt modern slavery, we need to follow the money, wherever that is,” she said.
 
Reynolds explains the commission has taken a multi-stakeholder approach involving sector leaders from around the world and including Australia and New Zealand, regulators, anti-slavery experts, survivors, researchers and the UN. 

“The financial sector is as broad as it is diverse – in location, size, reach, function and in the level of engagement with these issues. Nevertheless, all entities have a role to play when it comes to tackling these crimes through anti-money laundering (AML) and counter-terrorist financing (CFT) regimes and, for investors, supply chain due diligence,” she says. 

New technologies to detect modern slavery and assist in preventing individuals from being vulnerable to such exploitation in the first place are also an important part of the solution.
 
There are already some measures in place to help prevent financial services firms from being embroiled in modern slavery. Mandatory AML and CTF due diligence and reporting requirements apply to financial services firms. 

Additionally, Australia’s new Modern Slavery Act 2018 (Cth) came into force in January this year. Companies with annual consolidated revenues of $100 million or more are obliged to report under the regime. In New South Wales, entities with an annual turnover of $50 million or more must report under state-based laws. Entities to which the new rules apply must report on the risk of modern slavery occurring in their business and supply chain and the steps they have taken to mitigate these risks. 

“Partnerships will be essential to … end modern slavery. Sharing best practices through associations and forums is an important way to collaborate for change. When the commission releases its final report we want to ensure financial sector actors of all sizes have the practical tools they need to take action,” says Reynolds.

The commission’s next consultation forum will take place in The Netherlands in June, with the release of its roadmap scheduled for in September.

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