Human Trafficking and Smuggling – A Compliance Requirement
The problem of human trafficking and smuggling is staggering when you consider the human impact behind the numbers. Human trafficking is a $30 billion industry annually. There are more people in slavery today than at any time in history.
One in five victims of human trafficking are children, while in certain regions of Africa and Asia, they comprise a majority of trafficked persons. Women constitute two third of all human trafficking victims.
Over 250,000 people are trafficked in the United States against their will each year. Human trafficking is one of the most lucrative illegal businesses in Europe, with criminal groups earning roughly $3 billion annually.
In one criminal prosecution in the United States, a 31-year old Uzbek and 11 co-defendants were charged in Kansas City, Missouri in a racketeering conspiracy over a decade involving forced labor trafficking. The group recruited thousands of foreign workers from the Dominican Republic, the Philippines, Eastern Europe, and Central Asia.
When they arrived in the United States, the victims were forced into labor through threats and withholding of wages. The victims were employed through the Uzbek’s company to provide services to various hotels in the Missouri area. The victims were forced to live in apartments at exorbitant rents, were prohibited from sending or receiving mail, and required to pay large sums of money to the Uzbek’s company. On a week-to-week basis, the victims themselves earned no money since the Uzbek’s company kept all of their wages.
The Uzbek leader of the conspiracy was eventually sentenced to 12 years in prison, while the remaining defendants plead guilty and were sentenced to prison terms with the exception of a few cooperating defendants who were sentenced to time served.
The term “human trafficking” is distinct from “human smuggling.” The term “human trafficking” includes exploitation in the transportation or movement of individuals against their will. Human trafficking involves sex trafficking of persons under 18, or recruitment, harboring, transportation or obtaining a person for labor or services, through the use of force, fraud or coercion in order to subject the individual to involuntary servitude, peonage, debt bondage or slavery.
“Smuggling” is distinct in that it involves illegal transportation of individuals from one destination to another, such as importation of people into the United States to evade immigration laws.
Human trafficking is now the second largest criminal enterprise behind illicit drug trafficking. Drug traffickers have migrated into human trafficking due to lower criminal penalties.
There are specific legal risks for United States companies that may arise from federal contracting regulations and possible anti-money laundering implications. More important, however, is the reputational risk for global companies that may fail to implement basic hiring and employment controls to avoid human trafficking. Companies have to monitor and regulate their supply chains to avoid the serious harm from human trafficking and possible hiring or facilitation of hiring of human trafficking victims.
Since March 2015, every company with a United States government contract must comply with US regulations governing human trafficking. Companies that have a contract over $500,000 must implement a specific compliance program and certify each year to compliance.
Companies that fail to comply face civil and/or criminal liability, and are exposing themselves to whistleblower complaints and False Claims Act prosecutions.
As in many other areas, companies have to implement robust compliance programs to detect and prevent human trafficking by third party agents and subcontractors that may recruit potential employees from overseas or may use such employees in overseas positions. This requirement extends to monitoring and auditing of third party agents and subcontractors for compliance with human trafficking prohibitions.
Prime contractors are required to exercise vigilance in making sure that their subcontractors at any tier level comply with specific contractual requirements (“flow down”). Prime contractors, at a minimum, should require that subcontractors issue compliance reminders and exercise their own vigilance in ensuring compliance with these requirements.
Prime contractors and subcontractors are required to certify each year as to compliance. Each contractor must exercise appropriate due diligence to ensure such compliance. A prime contractor should consider implementing appropriate monitoring and auditing programs to ensure compliance by its subcontractors with the human trafficking regulations.