Modern Slavery Statement Guidance – Note to Financial Institutions

The United Kingdom Home Office has released guidance to companies that are required to make a public statement about human trafficking risks and prevention measures under the U.K. Modern Slavery Act of 2015.  Organizations are to address the emerging risks of exploitation at the company and in the supply chain caused by COVID-19 in their statement against modern slavery.

The guidance encourages careful consideration of the risks posed by changes in operations and supply chains that may result from the current economic crisis, including fluctuation in product or service demands and safety of workers.  Modern slavery statements may address implementation of policies that protect worker health (e.g., social distancing and cleanliness measures) and job security (e.g., sick or leave pay and guaranteed wages) during the pandemic.  Decisions to follow through with pending supply chain orders will reflect well on the company as they protect workers against nonpayment for work completed.  Assurances against recruitment practices that may result from a spike in product or service demand may benefit the statement when applicable. 

The guidance also acknowledges that companies may need to delay publishing their annual statement by up to six months and will avoid penalty with an explanation for the delay.  Similarly, the Australian Border Force has extended the deadline for submission of company modern slavery statements required by the Commonwealth Modern Slavery Act of 2018 by six months due to the pandemic.  Both regulating bodies acknowledge obstacles to supplier engagement, training and vendor monitoring during this time but are directing companies to explicitly state the new pandemic-related risks and how they are being mitigated.  Click here for recent guidance on statements made in compliance with the Commonwealth Modern Slavery Act of 2018 which offers examples of the pandemic’s impact on workforce changes and barriers to supply chain diligence.  Financial institutions and their commercial customers are not immune to this impact.

The two largest modern slavery statement regulators have issued special guidance to companies on addressing the impact of COVID-19 on labor exploitation risks.   This suggests increased attention on company, including financial institution, responses to human trafficking.  Moore & Van Allen PLLC’s Financial Regulatory and Response Team is available to advise on modern slavery statement requirements and human trafficking prevention and compliance. 

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