Compliance, Governance, Ethics and Sustainable Trade

Introduction and Context

International trade is no longer governed only by customs procedures, commercial contracts and transport documents. A transaction may be lawful in the exporting country but prohibited by sanctions in the importing country, restricted because of the identity of a beneficial owner, or commercially unacceptable because the goods involve forced labour, bribery or environmental harm. Digital trade also creates obligations concerning personal data, cybersecurity, records and automated decision-making.

Compliance therefore means more than checking a name against a sanctions list. It is an organised system through which an enterprise identifies legal and ethical obligations, assesses risk, applies controls, documents decisions, detects failures and improves continuously. Governance determines who has authority and accountability. Ethics addresses what an organisation ought to do when legal rules are incomplete, conflicting or open to interpretation. Sustainable trade extends the analysis to environmental, social and human-rights consequences across the value chain.

This chapter adopts a risk-based and management-oriented perspective. Laws differ by jurisdiction and change frequently; consequently, firms must consult current official sources and qualified advisers before executing sensitive transactions. The objective is not to memorise every regulation, but to build a defensible compliance architecture for import-export operations.

Learning Objectives

After studying this chapter, the reader should be able to:

1. Explain the relationship between compliance, governance, ethics and sustainable trade.
2. Design a risk-based control system for sanctions, export controls and denied parties.
3. Apply core anti-money-laundering and anti-bribery principles to trade transactions.
4. Assess forced-labour, data-protection and ESG risks in international supply chains.
5. Resolve ethical dilemmas involving intermediaries, customers, documentation and commercial pressure.
6. Develop monitoring, escalation, investigation and remediation processes.
7. Evaluate the role and limitations of technology, including artificial intelligence, in compliance.

1. Compliance as a Strategic Capability

A compliance programme has three related dimensions:

• Legal compliance: conformity with applicable statutes, regulations, licences, orders and reporting duties.
• Organisational compliance: implementation of policies, responsibilities, controls, training and records.
• Ethical responsibility: decisions consistent with integrity, human dignity, fairness and the avoidance of foreseeable harm.

A narrow approach treats compliance as a cost centre that delays shipments. A strategic approach recognises that effective controls protect market access, reduce disruption, improve customer confidence, support financing and preserve reputation. Compliance is particularly strategic in trade because a single transaction can involve the laws of the exporter, importer, transit states, banks, insurers, technology providers and ultimate-user jurisdictions.

A useful governance principle is three lines of responsibility:

The board and senior management form the governing layer above these lines. They approve risk appetite, allocate resources and ensure that commercial targets do not reward unlawful behaviour.

Risk-based compliance

A risk-based programme directs greater effort to transactions with higher exposure. Relevant factors include the parties, countries, goods, end use, route, payment method, intermediaries, ownership structure, transaction value and unusual behaviour. Risk-based does not mean profit-based: a low-value shipment involving a prohibited party may be more serious than a high-value shipment involving a transparent, low-risk customer.

A simple conceptual risk model is:

Likelihood refers to the probability that a compliance event will occur; impact refers to the severity of legal, financial, operational, human-rights or reputational consequences. This is a prioritisation model, not a legal test. Scores should not be used to justify a transaction that is expressly prohibited. Uncertainty and control effectiveness may be recorded separately rather than hidden in an arbitrary numerical score.

2. Sanctions, Export Controls and Denied Parties

Sanctions

Sanctions may restrict dealings with particular countries, territories, governments, entities, vessels, aircraft, individuals, sectors or types of goods. They can include asset freezes, prohibitions on trade, investment restrictions, financial restrictions and service bans. A transaction may be prohibited even where the named customer is not listed, for example when an entity is owned or controlled by a sanctioned person under applicable rules.

A sanctions review should examine:

1. The legal jurisdictions connected to the transaction.
2. The exporter, importer, consignee, end user, beneficial owners, banks, brokers, carriers and other relevant parties.
3. The goods, services, technology and technical assistance.
4. The destination, transit route and final use.
5. Applicable licences, exemptions, general authorisations and reporting requirements.

Screening is necessary but not sufficient. Names may be transliterated, abbreviated or misspelled; false positives require documented resolution. A potential match should be placed on hold until identity, address, nationality, ownership and other identifiers are assessed. Staff should never change spelling merely to avoid a screening alert.

Export controls

Export controls regulate the movement, transfer, re-export or release of sensitive goods, software, technology and services. Controls may arise from the nature of an item, its destination, end user or end use. Controlled technology can sometimes be transferred electronically or made available to a foreign national inside the exporter’s own country, depending on the applicable legal regime.

A practical export-control sequence is:

Classify → screen → assess destination and end use → determine authorisation → execute conditions → retain evidence.

Classification requires technical knowledge. Product descriptions such as “industrial equipment” are insufficient where control depends on performance, materials, encryption, tolerances or design characteristics. Engineering, sales, logistics and compliance teams should agree on a controlled product master containing classification references, technical specifications and review dates.

Red flags include:

• vague or implausible explanations of end use;
• reluctance to provide an end-use statement;
• unusual routing through unrelated countries;
• requests for unnecessary technical detail;
• payment from an unrelated third party;
• customers whose business does not fit the product;
• attempts to divide a shipment or alter documents; and
• pressure to omit the ultimate consignee.

A red flag is not proof of illegality, but it requires inquiry and, where unresolved, escalation or refusal.

Denied-party screening and beneficial ownership

Denied-party lists differ in legal effect. Some prohibit all dealings; others impose licensing, procurement or sector-specific restrictions. A mature process therefore records the list, date, screening logic, match result and reviewer—not merely a screenshot.

Beneficial ownership analysis is essential because legal ownership may conceal control. Organisations should obtain reliable corporate records, identify natural persons exercising ownership or control, understand voting arrangements and investigate layered structures. The exact ownership threshold and attribution rules vary by regime and must not be assumed universally.

3. Anti-Money Laundering and Trade-Based Financial Crime

Money laundering involves disguising the origin of proceeds of crime. In trade, criminals may manipulate invoices, quantities, product descriptions, routes, shipping documents or payment flows. Trade-based money laundering (TBML) can involve over-invoicing, under-invoicing, multiple invoicing, phantom shipments, falsely described goods or complex third-party payments.

An AML-oriented customer and transaction process normally includes:

• customer identification and verification;
• beneficial-owner identification;
• understanding the customer’s business and expected activity;
• screening for sanctions, politically exposed persons and adverse information where required;
• transaction monitoring against the expected profile;
• escalation of suspicious activity;
• legally required reporting to the competent authority; and
• retention of records for the applicable period.

AML obligations often apply most directly to financial institutions, but importers, exporters, freight intermediaries and professional service providers may face direct or indirect duties. All firms face commercial and reputational risk if they facilitate criminal proceeds.

A trade discrepancy should be investigated by comparing commercial, customs, logistics and financial data. For example, a high-value shipment of low-density goods routed through several unrelated jurisdictions and paid by a newly formed company may warrant enhanced due diligence. It does not establish money laundering by itself.

4. Anti-Bribery and Integrity of Intermediaries

Bribery risk is high where customs clearance, licensing, inspection, procurement or state-owned enterprises are involved. Anti-bribery laws may apply extraterritorially and may impose liability for acts of agents, distributors, customs brokers or joint-venture partners.

Core controls include:

• a clear prohibition on offering, promising, authorising or accepting improper advantages;
• due diligence before appointing intermediaries;
• written contracts describing legitimate services;
• reasonable, documented and proportionate remuneration;
• approval of gifts, hospitality, travel and charitable contributions;
• accurate books and records;
• segregation of duties; and
• training and confidential reporting channels.

The phrase “facilitation payment” should not be treated as a universal safe harbour. Some jurisdictions prohibit it; others recognise only narrow exceptions. Employees should use escalation and emergency procedures rather than relying on informal payments.

A third party demanding cash, refusing contractual compliance clauses, providing vague invoices, insisting on a personal bank account or claiming special access to officials presents heightened risk. Termination and investigation may be necessary even where the intermediary has generated substantial sales.

5. Forced Labour, Human Rights and Responsible Sourcing

Forced labour includes situations in which people cannot freely leave work or reject employment because of threats, coercion, deception, debt bondage, retention of identity documents or other forms of constraint. Risk may occur in raw-material extraction, agriculture, manufacturing, logistics and subcontracting.

Responsible sourcing should move beyond supplier declarations. A credible system combines:

1. risk mapping by country, sector, commodity and workforce;
2. contractual expectations and supplier codes;
3. worker-centred due diligence, including safe grievance channels;
4. traceability appropriate to the product and risk;
5. independent assessment and remediation;
6. corrective-action monitoring; and
7. responsible disengagement where remediation is impossible or unsafe.

Audits have limitations. Workers may be coached, auditors may have restricted access, and a single visit cannot reveal dynamic labour conditions. Worker interviews, recruitment-fee analysis, payroll review, migrant-worker protections and local civil-society information can improve evidence quality.

The ethical principle of do no harm matters in remediation. Abruptly cancelling a supplier may leave workers without wages and drive abuse underground. A responsible response may require urgent protection, repayment of recruitment fees, wage correction, freedom of movement, worker representation and a monitored improvement plan.

6. Data Protection and Information Governance

Import-export operations process personal data such as names, identification numbers, addresses, contact details, passport data, driver information and customs records. Data-protection obligations generally concern lawful processing, purpose limitation, data minimisation, accuracy, security, retention, transparency and individual rights. Requirements differ across jurisdictions, and cross-border transfers may require specific safeguards.

A practical data-governance lifecycle is:

Collect → classify → use for a defined purpose → share lawfully → secure → retain only as needed → delete or archive defensibly.

Controls should include role-based access, encryption where appropriate, multi-factor authentication, supplier assessments, incident response, backup protection and tested deletion procedures. Data protection is not achieved by placing all information in a “confidential” folder. Access must reflect operational need.

Compliance teams should distinguish personal data from commercially confidential data, although both may require protection. They should also consider data generated by screening tools and AI systems. Automated alerts can contain personal information and must be governed for accuracy, access, retention and challenge rights where applicable.

7. ESG and Sustainable Trade

Environmental, social and governance (ESG) performance concerns how an organisation affects people, ecosystems and institutions. Trade-related ESG issues include carbon-intensive transport, illegal sourcing, hazardous substances, packaging waste, biodiversity loss, worker safety, discrimination, corruption and weak board oversight.

ESG should not be reduced to marketing claims. Greenwashing occurs when environmental benefits are exaggerated, ambiguous or unsupported. Claims should be specific, evidence-based, comparable and qualified where uncertainty exists. A product described as “carbon neutral” requires a transparent boundary, methodology, baseline, treatment of offsets and explanation of residual emissions.

A supply-chain ESG assessment may examine:

Life-cycle thinking prevents displacement of harm. A sourcing decision that reduces transport emissions but increases deforestation or forced labour is not genuinely sustainable. Organisations should prioritise material impacts, disclose assumptions and avoid claiming perfection.

8. Governance Architecture and Internal Controls

A compliance framework should contain at least the following components:

Governance and risk appetite

The board should approve a policy framework, define unacceptable risks and receive meaningful reporting. “Zero tolerance” is useful for bribery or deliberate sanctions evasion, but it is not a complete risk appetite statement. Management should specify thresholds, escalation rules, delegated authorities and conditions for accepting residual risk.

Policies and procedures

Policies state principles; procedures explain who performs which step, using what evidence and within what timeframe. They should address exceptions, emergency shipments, licence conditions, system outages, record retention and post-transaction review.

Segregation of duties

The person creating a customer should not unilaterally approve a high-risk transaction, release goods and reconcile payment. Segregation reduces fraud and error, although small firms may use compensating review and independent oversight.

Training and competence

Training should be role-specific. Engineers need classification awareness; sales staff need red-flag and escalation skills; logistics staff need document and routing controls; senior managers need risk and accountability training. Attendance alone is not evidence of competence; scenario testing and performance monitoring are stronger indicators.

Records and audit trail

A defensible record explains what was known, what was checked, who decided, why the decision was reasonable and what conditions applied. Records must be protected against alteration and retained according to legal and business requirements.

Speak-up and investigation

Reporting channels should allow confidentiality and, where legally available, anonymity. Investigations need a defined mandate, preservation of evidence, protection against retaliation, documented findings and proportionate remediation. Management should distinguish intentional misconduct, negligence, system weakness and unavoidable uncertainty.

9. Technology, Automation and Artificial Intelligence

Screening, classification support, anomaly detection, supplier mapping and document recognition can improve scale and consistency. However, automated tools create risks of false positives, false negatives, biased data, opaque reasoning, outdated lists and excessive reliance on vendor claims.

Good practice includes:

• authoritative and frequently updated data sources;
• documented matching thresholds and tuning;
• human review of material alerts;
• testing with known true and false matches;
• version-controlled models and rules;
• access and change management;
• explainable decision records; and
• periodic independent validation.

Generative AI should not independently approve a sanctions-sensitive shipment or invent a legal conclusion. It may assist with summarisation or document comparison only within controlled workflows, with confidential data protected and outputs verified by competent personnel. Accountability remains with the organisation and authorised decision-maker.

10. Managing Ethical Dilemmas

Compliance dilemmas frequently involve competing duties. A customer may threaten to move business unless a licence review is bypassed. A broker may request an unofficial payment to prevent spoilage. A supplier may be implicated in forced labour, but immediate termination could harm vulnerable workers. Ethical analysis should make the conflict explicit rather than hiding it behind commercial urgency.

A useful decision process is:

1. Define the facts and identify missing information.
2. Identify applicable law, contracts, policies and stakeholder interests.
3. Determine whether any option is prohibited regardless of benefit.
4. Identify affected parties, including workers and communities not present in the negotiation.
5. Consider consequences, rights, fairness and organisational integrity.
6. Consult compliance, legal, security and relevant subject experts.
7. Document the decision, conditions and escalation.
8. Monitor outcomes and revise the decision if facts change.

This combines rule-based ethics, consequence analysis, rights-based reasoning and virtue ethics. No framework eliminates judgment. The goal is disciplined, transparent and accountable judgment.

11. Applied Case: Meridian Components Ltd. (Illustrative)

Background

Meridian Components, an electronics exporter, receives an urgent order from a distributor in Country A. The goods include encrypted communication modules and specialised testing software. The distributor is owned through two holding companies, requests shipment through Country B, and proposes payment from a logistics company in Country C. A local broker states that customs clearance will be accelerated through a “customary administrative gift.” A supplier audit also identifies migrant workers who may have paid recruitment fees.

Problem

Sales management wants shipment within forty-eight hours. Operations has screened the distributor’s name and found no exact list match. The company must determine whether it can lawfully and ethically proceed while protecting workers and avoiding bribery and financial-crime exposure.

Analysis

The exact-name result is inadequate. Meridian must identify beneficial owners and assess whether any are sanctioned or otherwise restricted. It must technically classify the modules and software, determine whether the destination, transit route or end use requires authorisation, and obtain a credible end-user statement. The third-party payment and unusual routing are AML and diversion red flags. The broker’s proposed payment creates anti-bribery risk. The recruitment-fee finding requires worker-centred remediation and supplier escalation.

Approach and solution

Meridian places the order on compliance hold and informs the customer that review is mandatory, without accusing it of misconduct. Compliance obtains corporate records, verifies owners, investigates the payment company, requests end-use and re-export commitments, and consults technical specialists on classification. Legal advisers confirm the relevant licensing and sanctions rules. The broker is instructed in writing that unofficial payments are prohibited; a compliant alternative clearance process is required.

The supplier is required to stop charging recruitment fees, reimburse affected workers under a monitored plan, protect workers from retaliation and provide evidence of correction. Meridian preserves records, updates the risk assessment and informs senior management. If ownership, end use or licensing cannot be satisfactorily established, the shipment is refused. If the transaction is authorised, release occurs only after licence conditions, payment controls and screening are completed.

Outcome

The enhanced review identifies an indirect ownership connection requiring further regulatory analysis and reveals that the distributor cannot provide a credible end-use statement. Meridian declines the transaction, reports internally according to policy and reviews other customers introduced by the broker. The supplier remediation plan continues under enhanced monitoring.

Learning points

1. Exact-name screening is not equivalent to effective sanctions due diligence.
2. Third-party payment and routing are indicators requiring investigation, not automatic proof of crime.
3. Commercial urgency does not override licensing or anti-bribery controls.
4. Human-rights remediation should protect workers rather than merely protect the buyer’s reputation.
5. A documented refusal can be a successful compliance outcome.

12. Measuring Effectiveness and Continuous Improvement

Compliance metrics should measure outcomes and control quality, not merely activity. Useful indicators include alert-resolution time, percentage of high-risk customers with current ownership data, overdue corrective actions, classification review age, training assessment results, substantiated incidents, repeat findings and supplier remediation progress.

Metrics require interpretation. A fall in alerts may indicate improved risk or a broken screening feed. A high closure rate may indicate efficient review or superficial disposition. Reports should combine quantitative indicators with qualitative case analysis, audit findings and emerging-risk assessment.

Incident response should include containment, legal assessment, evidence preservation, notification where required, root-cause analysis, remediation and verification. Disciplinary action alone is inadequate if incentives, system design or management pressure caused the failure.

Challenges and Limitations

Compliance systems face several structural difficulties:

• laws change and may conflict across jurisdictions;
• supply-chain visibility is incomplete, especially beyond first-tier suppliers;
• sanctions and ownership data may be ambiguous;
• excessive controls can delay legitimate trade and burden smaller suppliers;
• audits may create false assurance;
• technology can amplify biased or inaccurate data;
• employees may fear retaliation for reporting concerns; and
• ESG reporting may encourage selective disclosure.

The answer is not unlimited checking. It is proportionality, transparency, competent judgment, independent challenge and continuous learning. Firms should document uncertainty rather than manufacture certainty.

Best-Practice Checklist

An internationally active organisation should:

• map legal jurisdictions and transaction risk;
• maintain current product classifications and licence logic;
• screen parties, owners, vessels and relevant routes;
• investigate and document red flags;
• conduct risk-based AML and intermediary due diligence;
• prohibit bribery and maintain accurate books;
• assess forced-labour and environmental risks beyond first-tier suppliers;
• protect personal and commercial data;
• establish speak-up, investigation and non-retaliation processes;
• test automated tools and preserve human accountability;
• report meaningful metrics to senior management and the board; and
• remediate root causes, not only individual incidents.

Chapter Summary

International trade compliance is an integrated governance capability rather than a single screening activity. Sanctions and export controls require attention to parties, ownership, goods, destinations, end use and authorisations. AML controls address beneficial ownership, transaction patterns and trade-based manipulation. Anti-bribery systems govern intermediaries, payments, records and public-official interactions. Forced-labour due diligence must be worker-centred, while data protection requires lawful, secure and proportionate handling of personal information. ESG analysis considers environmental, social and governance impacts throughout the value chain.

Effective systems use risk-based assessment, segregation of duties, competent training, reliable records, escalation, independent assurance and continuous improvement. Technology can support these objectives but cannot replace accountable human judgment. Ethical governance requires organisations to respect legal constraints, human rights and stakeholder welfare even when commercial pressure is intense.

Key Terms

Compliance: Organisational conformity with applicable legal, regulatory and internal requirements.

Governance: The structures and processes through which an organisation is directed, controlled and held accountable.

Sanctions: Government restrictions imposed on specified persons, countries, sectors, goods or activities.

Export control: Regulation of the export, re-export, transfer or release of controlled goods, software, technology or services.

Denied party: A person or organisation subject to a legal restriction or prohibition on specified dealings.

Beneficial owner: The natural person who ultimately owns or controls an entity.

End use: The final purpose for which goods, technology or services will be used.

Trade-based money laundering: Use of trade transactions to disguise criminal proceeds or transfer value illicitly.

Enhanced due diligence: Additional investigation and controls applied to higher-risk relationships or transactions.

Politically exposed person: An individual entrusted with a prominent public function, together with relevant associated persons under applicable rules.

Bribery: Offering, promising, giving, requesting or accepting an improper advantage to influence conduct.

Facilitation payment: An unofficial payment intended to secure or accelerate a routine governmental action.

Forced labour: Work extracted through coercion, threats, deception, debt or restrictions on freedom.

Human-rights due diligence: A process for identifying, preventing, mitigating and accounting for human-rights impacts.

ESG: Environmental, social and governance factors used to assess organisational impacts and performance.

Greenwashing: Misleading or unsupported representation of environmental performance or benefit.

Data minimisation: Collecting and using no more personal data than necessary for a defined purpose.

Three lines model: Allocation of operational, compliance oversight and independent assurance responsibilities.

Red flag: A fact or pattern indicating that further inquiry or escalation may be required.

Review Questions

Short Answer Questions

1. Why is sanctions screening necessary but insufficient for transaction compliance?
2. What is the purpose of beneficial-ownership analysis?
3. Identify four red flags associated with trade-based money laundering.
4. Why can a supplier audit fail to identify forced labour?
5. What responsibilities belong to the first and second lines in the three-lines model?

Long Answer Questions

1. Explain how an exporter should integrate sanctions, export controls and end-use review into one transaction workflow.
2. Discuss the principal components of an effective anti-bribery programme for customs brokers and distributors.
3. Evaluate the relationship between forced-labour due diligence, responsible disengagement and worker remediation.
4. Analyse the data-protection risks created by digital customs records and automated screening systems.
5. Explain how boards and senior managers should govern compliance risk without obstructing legitimate trade.

Analytical / Application Questions

1. An importer requests payment from an unrelated company, uses a circuitous route and refuses to identify its ultimate customer. Design an investigation and escalation plan, distinguishing evidence from suspicion.
2. A supplier is found to have retained migrant workers’ identity documents but offers immediate corrective action. Should the buyer suspend, terminate or continue the relationship? Apply legal, ethical and worker-impact reasoning.
3. A generative-AI tool clears most screening alerts but has not been independently tested. Evaluate whether it should be used for automatic shipment release and propose a controlled implementation plan.

Multiple Choice Questions with Answers

Question 1

Which statement best describes a risk-based compliance system?

A. It applies identical review procedures to every transaction.

B. It directs greater controls and resources toward higher-risk situations.

C. It permits prohibited transactions when their value is low.

D. It replaces legal analysis with a numerical score.

Correct Answer: B. It directs greater controls and resources toward higher-risk situations.

Question 2

Why is beneficial-ownership analysis important in sanctions compliance?

A. It determines the product’s customs duty.

B. It identifies the carrier’s insurance provider.

C. It can reveal control or ownership by a restricted person behind an entity.

D. It eliminates the need for end-use review.

Correct Answer: C. It can reveal control or ownership by a restricted person behind an entity.

Question 3

Which is an example of a trade-based money-laundering red flag?

A. A transparent payment from the verified customer’s account.

B. A shipment with consistent value, quantity and description.

C. A routine renewal of a documented licence.

D. A complex route combined with an unrelated third-party payment.

Correct Answer: D. A complex route combined with an unrelated third-party payment.

Question 4

What is the proper response to an unresolved potential denied-party match?

A. Release the goods immediately if the customer is important.

B. Alter the customer’s spelling to remove the alert.

C. Place the transaction on hold and investigate relevant identifiers.

D. Delete the alert after checking only the company name.

Correct Answer: C. Place the transaction on hold and investigate relevant identifiers.

Question 5

Which control most directly reduces anti-bribery risk from intermediaries?

A. Paying commissions in cash without invoices.

B. Due diligence, written contracts and documented reasonable remuneration.

C. Allowing the intermediary to approve its own expenses.

D. Avoiding all records of gifts and hospitality.

Correct Answer: B. Due diligence, written contracts and documented reasonable remuneration.

Question 6

Which practice is most consistent with worker-centred forced-labour remediation?

A. Immediately abandoning the supplier in every case.

B. Ignoring the issue if the supplier signs a declaration.

C. Protecting workers, correcting abuse and monitoring improvement.

D. Transferring all responsibility to the auditor.

Correct Answer: C. Protecting workers, correcting abuse and monitoring improvement.

Question 7

Which principle requires an organisation to collect no more personal data than necessary?

A. Data minimisation

B. Beneficial ownership

C. Segregation of duties

D. Responsible disengagement

Correct Answer: A. Data minimisation

Question 8

What is a major limitation of automated compliance screening?

A. It cannot process any names electronically.

B. It may produce false positives, false negatives or opaque results.

C. It always eliminates human error.

D. It makes record retention unnecessary.

Correct Answer: B. It may produce false positives, false negatives or opaque results.

Question 9

Which body normally provides independent assurance in the three-lines model?

A. The sales department

B. The freight carrier

C. Internal audit or an equivalent independent function

D. The customer’s broker

Correct Answer: C. Internal audit or an equivalent independent function

Question 10

Why can abrupt supplier termination create an ethical problem in forced-labour cases?

A. It may leave affected workers without income and drive abuse underground.

B. It automatically legalises the supplier’s conduct.

C. It removes all environmental impacts from the supply chain.

D. It guarantees that the buyer has no further obligations.

Correct Answer: A. It may leave affected workers without income and drive abuse underground.