Modern slavery: how to root it out of the supply chain

Organizations are increasingly fighting modern slavery in supply chains, thanks to a decade of regulatory momentum. But how can you eliminate parties connected to modern slavery from your network?

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Four steps to risk management

Identifying modern slavery risks in customer networks requires screening that is holistic and risk-based. We recommend a four-pronged approach.

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Know your networks

Modern slavery, from sex trafficking to state-sponsored forced labor, permeates the global economy. Modern slavery might not be happening in your organization, but it is still important to identify supply chain risks — these could come from direct partners or peripheral stakeholders, such as auditors.

Orbis corporate structure data enables you to identify risks at each node in the supply chain, beyond your direct client or tier one supplier — such intelligence is imperative to assessing and combating modern slavery risks. The synthesis of Orbis and GRID in Compliance Catalyst 2 gives you a 360-degree view of labor and human trafficking risks in supply chains and corporate structures.

Tailor your screening

As regulations grow in number, regulatory bodies can share more data. Doing so enhances institutions’ ability to accurately assess modern slavery risk in their compliance due diligence.

GRID contains several regulatory lists related to modern slavery. These are categorized to allow focused screening against every risk stage, from allegations to convictions. The lists can be uniquely configured for onboarding or portfolio monitoring.

Highlights of regulatory lists in GRID

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Other lists include related United Nations sanctions lists and local modern slavery lists for organizations and individuals.

Review global adverse media

The global trend toward combating modern slavery masks uneven development and roll-out of national and regional regulations. Enforcement also varies between jurisdictions, which may prosecute and report modern slavery according to their own typologies and criminal frameworks.

GRID ingests and categorizes adverse media related to modern slavery typologies including child pornography, illegal organ trading, migrant smuggling, wage theft or debt bondage, and workplace misconduct. These typologies are wrapped into one risk configuration intended to cover all issues of modern slavery from an international perspective, regardless of sovereign legal frameworks. This out-of-the-box risk configuration is ideal for multinational corporations with a wide footprint. Clients have premium options to broaden or narrow their screening scope depending on their portfolio and operational needs.

Screen for associated entities by using special research collections

Enhanced research collections add value to assessments of entity risk as it relates to broader anti-money laundering risks. Enhanced research collections include:

• PEP Connect to monitor individuals in power with greater opportunity to conceal human trafficking activities.
• Sanctions Connect & Iran Connect to identify associates of sanctioned entities that could be tied to human rights violations.
• Legal marijuana dispensaries to monitor cash businesses with high potential for proceeds laundered from human trafficking.
• Virtual currency providers and ATMs to actively monitor potential modern slavery transactions via digital currencies.

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Know your customer with Moody’s Analytics

The goal of compliance is not to detect money laundering, but to find underlying criminal industries, such as modern slavery, that perpetuate illicit financial flows. You can adopt this approach at scale while maintaining operational efficiencies by using our best-in-class features:

• Data and content: high-quality and complete entity coverage on modern slavery and other AML/KYC risks, with corporate structures, monitored lists, adverse media, and special research collections through Orbis, Compliance Catalyst, and GRID.
• Out-of-the-box solutions: best practice designed by experts to tackle specific modern slavery risks, now available in Compliance Catalyst.
• Product customization: our data can be configured to adjust risk scope, risk stage, look-back period, or to filter by geography or identity. It can also be adapted to meet the needs of adverse media screening in GRID.
• Operational efficiencies: managing emerging risks is easy with false positive reduction through Analyst Review and AI Review. Clients with a View subscription can gain insight into their alerts and non-alerted entities to see their portfolio’s configuration and optimize tuning capabilities.

If you have any questions about MA’s solutions or would like to discuss KYC for your business, use our contact form.

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