Compliance Challenge: The Links Between Corruption and Human Trafficking

TraffickingCompanies are increasingly being required to disclose how they assess and respond to the risks of human trafficking in their product supply chains. Statutes like the California Transparency in Supply Chains Act and the U.K. Modern Slavery Act require such disclosures. In addition, certain U.S. federal contractors are now required to develop detailed compliance plans to address the risks of trafficking associated with the good and services they provide to the U.S. Government.

As companies seek to address human trafficking-related risks, it is important to ensure that internal compliance efforts are appropriately integrated across the company. Corporate personnel focused on anti-corruption compliance efforts should be aware of the relative risk of human trafficking-related activities that may be associated with discrete aspects of the company’s operations, including the activities of its subsidiaries, business partners, and suppliers. These risks may be associated with specific geographies, the types of work being performed, and — especially — the use of labor recruiters.

Companies should also recognize the risk of corruption-related liability associated with labor recruitment. Human trafficking is an extremely lucrative crime and is often dependent upon bribes being paid to immigration authorities, law enforcement officials, border control personnel, and other public officials. To the extent that a company is knowingly benefiting, directly or indirectly, from the cheap labor that results from such bribery, the company and/or its officers may face liability pursuant to the Foreign Corrupt Practices Act (“FCPA”). New reports by Liberty Asia and the Freedom Fund highlight the extensive links between corruption and human trafficking and explore the potential for corporate liability pursuant to both the FCPA and the Trafficking Victims Protection Act (“TVPA”).

In the face of such risks, companies need to understand their “labor supply chain” that is linked to their product supply chains. Due diligence on the sources of labor that a company relies upon should be a component of it anti-corruption efforts and a company should ensure that relevant personnel across the company are engaged in addressing interlinked corruption- and trafficking-related risks.

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