Posted by & filed under AML Presentations.

Recently the TransparINT team had the opportunity to give a presentation to AML groups at Standard Chartered Bank on the heightened risks involving shell companies.

To highlight this complex topic, we used a case study involving well know nominee director Erik Vanagels to provide a real-world example on how to investigate these high risk entities.  Please find the full presentation below.  Enjoy!

Posted by & filed under Negative News, Research & Investigation.

We’ve developed the TransparINT Platform to be the most comprehensive tool for quickly and systematically identifying adverse media and negative news.

BuStop_Signt we know that many departments still rely on search engines, such as Google, as the main tool to identify negative information.  While there are several reasons why this is not the best method, the below examples are absolute errors that should not be part of an effective negative news search string.

 

1. Depreciated Operators

Based on a number of reasons, Google has depreciated the functionality of several search operators that are commonly used in negative news search strings.

The biggest update has come from the depreciation of the Boolean + operator.  Based on Google’s advanced operator page, the addition of a plus sign to a search term now either prompts the lookup of Google+ pages or a blood type.

Another depreciated, but commonly used connector by AML investigators, is the tilde (~) character, which when appended to the front of a word prompted Google to include synonyms for the search term.

Any negative news search string utilizing these connectors is no longer technically valid.

– For more information on the depreciated plus sign (+) functionality click here
– For more information on the the depreciated tilde (~) operator click here

 

2. Lower Case “OR” Connectors

The “OR” operator is an essential element of any good negative news search string, and is used to chain together lists of derogatory key words that may have a connection with your search focus’ name.  To use this operator correctly, it MUST be capitalized.  This is an extremely common mistake, and a lower case “OR” will not correctly be interpreted as the Boolean operator intended.

 

3. Too Many Words

While stuffing as many negative key terms in a search string may seem like a good way to ensure that all available negative information will be uncovered,  Google only recognizes the first 32 words in a query.

All words after 32 will be ignored, and Google will provide you with the below message.

google-word-limit

 

4. The “AND” Operator is Unnecessary

Google automatically appends the “AND” operator between search terms, so there is no need to include it in a search string.  While adding an “AND” won’t make your search string invalid, it does add a small amount of additional time and expands the complexity of your search sting, increasing the possibly of typos.

 

The above rules only apply to Google, and every different search engine follows slightly different rules.  While Google can be a useful tool, compliance officers shouldn’t have to worry about correctly crafting complex search strings, or keeping up to date on Google”s search policy changes to find the information they need.

If you are interested in seeing a better way to search for negative news, contact us here to set up a live demo of the TransparINT platform.

Posted by & filed under Research & Investigation.

Five open source methods to help you track down ultimate beneficial owners (UBOs).UBO Chart

There has been a lot of attention on FinCEN’s proposed customer due diligence requirements for financial institutions to identify beneficial owners of legal entity customers.  Even though these rules are greatly needed, anyone who has ever been tasked with this responsibility knows just how complex it can be to identify UBO information.

Unfortunately today, there is no central database where this information exists, and most governments do not even require the information to be captured when a company is registered.

Despite that, UBO information can many times be identified through public sources.  Below are some of the best ways to help identify company owners.

 

1. Company Website

The public source starting point for any company research should be the company’s own website.  While this is obviously a biased source, it can identify key senior management who many times also turn out to be company owners.  It can also identify if the company is a subsidiary of another company.

For publicly traded companies, look for the “Investor Relations” section of the site for ownership.  If not specifically highlighted, the company’s most recent annual report and/or audited financials may contain this information.  Remember, just because a company is publicly traded, it doesn’t mean that there aren’t individual shareholders with a significant portion of the company.

Bonus tip: Make sure to look at the company’s copyright footer at the bottom of the site’s web page.  This can be useful in identifying the company’s full legal name for future research, and many times can identity a parent company if the company is a subsidiary.

 

2. Corporate Registries
corpsearch.net

Corporate registries maintain incorporation filings and records for legal entities.  For non-publicly traded companies, they are the best way to help track down ownership.

The challenge arises in that they are location specific and every country/state has different laws on what information needs to be obtained at the time of incorporation.  Also, not all registries provide direct or full access to their information.

To save you the time of trying to find every different international corporate registry or Secretary of State website, below are some links to corporate registry directories and searches.

Bonus source: ICIJ’s Offshore Database

 

3. EDGAR For Publicly Traded Companies and their Subsidiaries

The EDGAR (Electronic Data Gathering, Analysis, and Retrieval) database maintains a searchable index of filings by companies who are required by law to report with the Securities and Exchange Commission.

The volume of different types of filings contained in the EDGAR database can get overwhelming quickly if you are not sure where to look.

Every corporation listed on a U.S. stock exchange is required to file annual reports with the SEC, called a 10-K form.  The “Exhibit 21” of the 10-k provides a list of subsidiary companies along with the place of incorporation for each subsidiary.

In addition to the 10-k, Forms 3, 4, and 5 can be used to identify corporate insiders, which are company officers, directors, or any beneficial owner owning more than 10% of its stock.

 

4. Form ADV  (for investment advisers only)
Form ADV Search

The Form ADV is used by investment advisers to register with both the Securities and Exchange Commission and state securities authorities.  The form consists of two parts, and part one requires information about the investment adviser’s ownership, in addition to information about its clients, employees, business practices, affiliations, and any disciplinary events of the adviser or its employees.

To perform an investment adviser search, visit the  Investment Adviser Public Disclosure website and enter the firm’s name.  Information on the firm’s direct and indirect ownership is contained under Schedule A and Schedule B on the bottom left menu sidebar.

 

5. Search Engines

The indexed public web now contains over 30 trillion web pages (that’s right, 30,000,000,000,000).  There is a very good chance that information on a company’s ownership is identified somewhere out there.  To avoid being overloaded with a flood of non-relevant results, I suggest targeting your search query similar to the below, which will work in all major search engines.

"Company Name" owner OR shareholder

 

There is no one-stop-shop for UBO information, but the above are some of the best public resources available to researchers today.  In future posts, I plan on breaking down some of the other more practical challenges facing KYC officers complying with UBO regulations.

Posted by & filed under Company.

Over the last two years we have been dedicated to providing AML and financial crime compliance tools to address the needs of modern compliance officers.

We will be continuing with that goal by using this blog to communicate company and product updates, as well as commentary on new developments in our industry.

Stay tuned for our next update!