Modern slavery has emerged as a “statistically significant” area of concern for the first time, according to the latest annual snapshot of UK and European whistleblowing trends from Safecall, a provider of speak-up helpline solutions.

According to the benchmark report, modern slavery has climbed into the company’s chart of most visible concerns on the back of a general rise in whistleblowing reports. The construction sector has emerged as a major hotspot.

Safecall Operational Excellence Manager Greg Ogle says the trend indicates a rise not just in awareness of modern slavery but employees’ confidence in sounding the alarm.

As accountants in business work across the spectrum of industries and are often required to conduct both internal and external due diligence, they are well placed to spot warning signs of modern slavery. So, which particular business functions and types are susceptible to the issue – and what are the main red flags?

Models at risk

“In their own businesses, it is important for accountants to know what their models are,” says Colleen Theron, CEO of sustainability and human rights consultancy Ardea International.

Some of the areas where those models could be at risk are in relation to canteens, building maintenance, facility management services, waste operations or even outsourcing. For example, if the business is relying on call centres, or if it’s working with a group of outsourced service providers in India or elsewhere, the finance team should be aware of any circumstances around those functions that could give rise to exploitation.

“We know that there’s a cohort of businesses where you need to be ultra-sensitive to these concerns. Nail bars, car washes, restaurants and agriculture are all areas where you could potentially find exploitation taking place,” Theron says.

Unusual deposits

When it comes to assessing any business in their network, accountants should take a critical look at any information provided about its outputs and functions. What are you seeing in terms of staffing levels across the business? How do the cash flows work? And what sort of funds are being invested in the organisation? Theron says the answer to that question could be “none”. At the same time, she says, it would also be prudent to scrape the internet to see whether prospective clients have any adverse media links in this territory.

“Another issue to pay attention to is how and where companies may be hiding money,” Theron says. “For example, you may find that a nail bar has six high-end company vehicles, from Range Rovers to Aston Martins. Well, how does that work? Then there’s the question of what kind of money is being paid into which accounts, and how. Are you seeing unusually large amounts of money being deposited at a certain time of the month or year?”

Theron says further red flags may overlap with wider forms of financial crime. “Perhaps the beneficial ownership is unclear, or the business has unusual structural complexities that it may be using to disguise cash flows. You may also pick up on dodgy-looking tax returns, or evidence indicating the falsification of documents – which could arise from your counterparts in the opposite finance team being on the wrong side of the law.”

Progressively ruthless

One UK organisation that is monitoring this terrain on a constant basis is the Office of the Independent Anti-Slavery Commissioner (IASC). Commissioner Eleanor Lyons says: “Every year in the UK we are seeing rising numbers of victims of modern slavery being exploited. The data for last year shows the number of potential victims is at a record high.

“We must do more to end this horrendous crime. Tackling modern slavery is everyone’s business – with businesses having an important role to play in identifying and preventing it.”

Lyons confirmed that more businesses are reporting modern slavery as a concern and are increasingly recognising the risks within their supply chains. However, she notes: “Criminals are becoming progressively more ruthless in their willingness to exploit vulnerable individuals and are finding new ways to do so. In this rapidly evolving world with much activity moving online, criminals are exploiting victims to transfer illegal profits, move money or use victims’ bank accounts.

“That is why the finance profession has an increasingly pivotal role to play in the detection and reporting of suspicious activity. Some financial institutions, for example, have already started upskilling and training stuff on spotting modern slavery.”

Call for vigilance

Lyons says common modern slavery red flags include large sums of money quickly and regularly flooding into and out of a bank account; living expenses and bill payments missing from accounts; the same mobile phone number and/or address being used for multiple accounts; frequent and/or high payments for flights; expenditure at airports or other ports; large and regular transfers to accounts overseas, plus recurring payments of wages below the national minimum wage – perhaps through an agency.

“Children are at risk of exploitation, too,” Lyons says, “with them making up 44% of the numbers of potential victims identified in the UK. So, finance professionals should also look out for the opening of one or more accounts by a child or young person and the amount of money in the account being unreasonably high for their age.”

She added: “This list is by no means exhaustive, so I encourage those working in the finance profession to remain vigilant to the risk of modern slavery. We all have a role to play in preventing exploitation, helping to identify victims and increasing the prosecution of the criminals behind this crime.”

ICAEW Sustainability Manager, Society, Marion Osieyo says: “The accounting profession provides a valuable skill-set for strengthening corporate governance to tackle modern slavery. 

“In addition to preventing exploitation, an increase in due diligence around and reporting of modern slavery-related risks provides an opportunity to deepen stakeholder relationships across the value chain – and to involve teams across a range of different business functions in enabling responsible business.”

Further information

For a suite of further advice and resources on this topic, visit ICAEW’s modern slavery hub, featuring our own guide to questions to ask, to probe supply chains and business activities for red flags.