The 36-year-old Latvian was arrested after an investigation by the Gangmasters and Labour Abuse Authority (GLAA).
The GLAA said investigators were joined by officers from Gwent Police in carrying out the dawn raid at an address east of Newport city centre on the morning of Tuesday 9 October.
The suspect is being questioned following intelligence that he was acting as an unlicensed gangmaster, contrary to Section 12 of the Gangmasters (Licensing) Act 2004.
Officers searched the property during their raid to seize evidence relevant to the investigation.
Anyone who provides workers for food packaging and processing, agriculture, horticulture, and shellfish gathering requires a GLAA licence by law.
The maximum penalty for operating without a licence in one of the GLAA regulated sectors is 10 years in prison and/or a fine.
The GLAA has police-style powers to investigate labour market offences in England and Wales. Formed in May 2017, the authority tackles offences under the Modern Slavery Act, the National Minimum Wage and Employments Agencies Acts, as well as the existing Gangmasters Licensing legislation.
The GLAA is the foremost investigative agency for labour exploitation and modern slavery in the UK. The authority also licences companies (gangmasters) that supply labour for agriculture, horticulture, shellfish gathering as well as all associated processing and packaging.
Its main strategic priorities are to prevent worker exploitation, protect vulnerable people and tackle unlicensed and criminal activity.
The GLAA launched new licensing standards earlier this month, setting out the conditions required to become a licensed gangmaster. All GLAA inspections now reference the revised standards.
Anyone who believes someone is being exploited can reveal their concerns by calling the GLAA’s intelligence team on 0800 432 0804 or emailing email@example.com.