KYC and business associate due diligence: a key step to establishing appropriate relationships
All companies need to conduct risk assessments of its business associates to identify and appropriately manage any critical issues if they are to be aligned with best practice in the field of compliance governance – especially the ISO 37001 standard on anti-bribery – and domestic and supranational anti-money laundering regulations.
Background checks on business associates are not carried out to hinder the establishment of a contractual relationship but rather to make an organisation aware of the potential risks associated with a potential business associate, to identify the most effective ways and means of minimising those risks, and to establish the contractual relationship with peace of mind.
KYC: Know Your Customer
Our KYC team works hand in hand with our trusted partners to conduct checks on business associates. The team uses a digital platform that allows checks to be conducted using pre-established risk indicators and algorithms that ensure systematic risk assessments and a legal assessment of any red flags. Moreover, the digital platform means the process can be fully traced, continuously monitored and verified after the fact by compliance, legal and/or internal auditing departments.
Users can access the platform at any time to view the status of workflows and to view, download and print summary reports.
The advantages of KYC screening
You can obtain optimal results quickly and at an affordable cost by entrusting us to:
- identify a business associate’s direct partners (people/companies), key representatives (members of corporate bodies) and ultimate beneficial owner
- check the reputation of each of the above using databases (PEP, sanctions and adverse media); if companies, check all key representatives of each company found in the databases (members of corporate bodies)
- research the business associate and all key representatives in both Italian and English open sources
- analyse and, if necessary, sort out possible false-positive readings (by cross-referencing information found in databases/open sources or provided by the company)
- draw up a due diligence report that points out any red flags/risk indicators, which are assessed from a legal perspective (a summary of the checks conducted is attached to the report)
KYC compliance software allows you to automatically manage searches of open sources – and any adverse media found – through AI algorithms that can:
- process thousands of news reports with a high degree of accuracy
- recast the data to identify news sentiment
- bypass the linguistic constraints of text searches on the web
- identify keywords regarding a given organisation or its people, in order to automatically and continuously monitor business associates
- take user feedback into account by refining searches
Once the search keywords are identified (with the help of the AI engine), the process can be automated to ensure constant business associate monitoring.
This AI system allows the adverse-media monitoring software to learn from user feedback and refine and constantly improve media classification.
The software can interact with external lists and providers (e.g., World Compliance, World Check, Bureau Van Dijk and Cerved).
Besides the platform being quick to set up (already in the cloud), here are some other advantages of having us on board:
- retracing of chains of shareholders/beneficiaries
- identification of directors, holders of powers of attorney and supervisory bodies
- sifting of specialised databases for risk indicators
- searching on the web for information suggesting possible additional risk indicators
And all this can be completed in just two business days.
We then deliver a report – in line with international standards – detailing:
- all checks performed
- legal assessment of any risk indicators
- risk mitigation measures and investigation
Innovation to support our legal expertise
Our use of innovative tools allows us to expand the scope of any search, reduce the costs and time needed for due diligence investigations, and obtain specific information in real time.
Here are some of the advantages our approach gives you:
- digital platform already set up for the entire due diligence process
- connection to specialised databases, and automatic extraction and analysis of data from corporate and reputational databases
- further searches in open sources with an exclusive automated web search module and AI engine
- due diligence based on risk indicators and algorithms that ensure consistent risk assessments
- access to the platform to review activities carried out and consult, download, print the related report
- notifications (sent from the platform) on each due diligence phase
- a traceable process that can be continuously monitored and verified after the fact by other departments (e.g., internal auditing)
Workflow: the steps of our KYC service and due diligence on business associates
- due diligence request
- retracing of chain of shareholders, beneficiaries and key persons
- screening of specialised databases
- screening of open sources
- identification, assessment and check of red flags