Risk & Kredit Compliance

The power of knowing the beneficial ownership

30 aug 2018

Article made by our partner Dun & Bradstreet

There can be little doubt that multiple beneficial owner-ship definitions, a lack of public ownership registries, the complexity of legal corporate vehicles, and the use of off-shore financial centers represent significant challenges to organizations affected by the latest Anti-Money Laun-dering/Counter-terrorist Financing (AML/CTF) regula-tions. Transparency over ultimate beneficial ownership (UBO) is still the exception, not the rule, in many tax jurisdictions.

Getting to the detail
has never been straight -forward. To calculate UBO, disparate compliance teams have to rely on multiple reports and spreadsheets, as well online business information reports, which are often inflexible, inaccurate, and do not necessarily integrate with other systems and data sources. Typically, it can take days to manually identify attributes (confirming self-certified information such as company name, address, and registra-tion details), verify those attributes (such as ownership levels and financial reports), and, if deemed necessary, conduct en-hanced due diligence. In the meantime, the structure being investigated can shift, with small changes in one part affecting the whole.

Being able to quickly see how an organi-zation is structured is fundamental to the know-your-customer (KYC) process. Large financial institutions need rules-based workflow that shows the organi-zational structure in a modern way to support KYC automation.

By far, the most common approach is to bring workflow and content together through application programming interface (API) technology. This dra-matically accelerates the data-capture process and ensures workflows can be built as needed, thereby enabling straight through-processing where possible and directing complex remediation to the right teams quickly.

Instead of referring to online business information reports and spreadsheets to calculate UBO, the compliance analyst makes a query on the business entity inquestion through the API. This triggers analysis of the direct, indirect, and looping ownership structures of the business entity, and delivers within seconds the relevant shareholders and their percent-age ownership stakes. It also supports the building of an alerts methodology for changes to ownership.

The ability to identify benefi-cial owners in a few
clicks not only helps fast-track the standard
onboarding process, but frees up internal resources
to focus on more complex investigations

By breaking the remediation cycle and reacting to changes immediately, valuable resources can focus on the right custom-ers, assessing changes that matter, and acknowledging those that are not of material concern. Furthermore, the ability to identify beneficial owners in a few clicks not only helps fast-track the standard on-boarding process, but frees up internal resources to focus on more complex in-vestigations, as well as reduces exposure to reputational risk (such as screening for potentially damaging politically exposed people, or PEPs) and reduces opera-tional costs.

Exploiting on-demand (data-as-a-service), timely, accurate, and reliable data sources that pull together global cor-porate linkage on business entities and personal share ownership means that organizations can be confident they have achieved the single customer view they need to meet compliance challenges and mitigate reputational risk.

Better still, allowing relevant and high-quality data to be shared across the enterprise can help organizations move beyond compliance as a box-tick-ing obligation to become more agile and competitive.

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