OPINION ALL ABOARD! Companies are choosing to be more diligent when onboarding new international customers. AUTHOR – David Walters David Walters ADVANCES in technology have meant that it is easier than ever before to do more business in different countries. This can mean more profit and productivity, but with increased international trade, can come increased pressures to carry out due diligence. In many respects we are lucky to have Companies House data in the UK and the checks and balances which that enables us to put in place. When a business starts trading abroad, it needs to assess all the possible risks, this includes understanding who they are trading with and what the potential financial risks and threats of that could be to their business? With the expansion of international trade, it is inevitable that there will be more challenges for businesses. These challenges will also be there for us as a business intelligence service, to ensure we have the most joined up information to provide our customers with. It’s essential that in a changing socio-economic environment the decisions that businesses make are as informed as possible. When looking at data in different countries, it is crucial that we can build a global view to understand risk, and that means joining up directors and stakeholders and any other touch points that a business may have. It’s increasingly important for businesses in our industry to use data to create links across the world. Key things to look out for are structures around corporate hierarchy, stakeholder reports, director linkages and a global index of companies worldwide. Beneficial ownership identification and verification is now an essential component of the client know your customer (KYC) on-boarding process. It is at the heart of the latest raft of international antimoney laundering (AML) or counter terror financing (CTF) sanctions and regulations, as well as tax compliance laws and standards such as Foreign Account Tax Compliance (FATCA) and Common Reporting Standard (CRS). Although the impact on the financial services industry is widely acknowledged, other organisations with know your vendor (KYV) and know your third party (KYTP) disclosure obligations are also directly affected. COUNTRY OWNERSHIP Ownership of a company for example, might not be in one country – trade crossing territories requires us to go further in helping our customers understand the financial risk. We could be looking at Costa Rica, Luxemburg, Jersey and Guernsey for example. Companies are choosing to be more due-diligent when on-boarding and dealing with other companies and organisations. Using blockchain contracts can also provide a coordination and enforcement framework internationally for services such as compliance, which is crucial along with matching/cleaning and enriching customer data. It’s important that they not only analyse the risk of other company structures but also the people driving the business in terms of the directors. By joining up directors globally we can show a view of the director’s performance while also flagging any potential risk, for example if the director is disqualified in one country for example, but not in another. It’s also important to remember that regulatory changes can bring restrictions to data which although can be tough to navigate for businesses like ours, they are trying to protect the consumer themselves. For example, if we look at the fifth antimoney laundering directive, although not as extensive as the fourth, it is more of a series of amendments adding various provisions that weren’t included originally, with changes around enhanced powers for direct access to information, and increased transparency around beneficial ownership information and trusts. To get a full understanding of potential risk, one must also take into account the non-traditional data sets. These can come from social media for example – activity levels, number of followers, brand awareness, details of people who work there etc. A significant amount of information can be gathered online. Cyber security risks might also impact a business if it is not secure. Non-traditional data sets can be used to see if a business is growing, if a business is using more devices and has more credit checked contracts. Every successful company in the world is using financial data to its advantage. Data is the most valuable commodity and our tools let you utilise it. Companies survive and beat the competition internationally by collecting and using better information, faster and more effectively. Looking to the future we are working with a more tailored approach for businesses owners, considering what their desired risk exposure is and customised scores that everyone can afford; it can’t be a one size fits all. David Walters is Group Head of Data at <strong>Credit</strong>safe. The Recognised Standard / www.cicm.com / <strong>December</strong> <strong>2019</strong> / PAGE 26
There are easier ways to achieve peace of mind. Like buying credit reports from Cedar Rose. cedar-rose.com +357 25 346630 The Recognised Standard / www.cicm.com / <strong>December</strong> <strong>2019</strong> / PAGE 27
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