Last week I presented a live compliance webinar. Now free to watch on demand, it was called Beneficial ownership – have you got it right?
In this, the first of a number of follow-up pieces, I'm going to take a look at the results of the four polling questions we asked our audience of more than 1,000 compliance professionals from around the world during the broadcast – the results might surprise you.
75% of our audience plan to review their beneficial identification process before the end of 2017
This is based on the question: How urgent is it for you to review your current process for identifying beneficial ownership?
Said Keith: "I'm actually a little surprised that 75% are saying that it's going to be this quarter or before the end of 2017. I knew it was an issue but the audience seems very keen on looking at this in the near-term."
Our other panellist, Bill Hauserman of Bureau van Dijk's Americas office, added: "You've got several regulations that '17, '18, '19... those are the years that they're going to have to be written up for if they're not adhering to them, or they're going to at least have enough that regulators are satisfied or an auditor is satisfied initially. So that actually doesn't surprise me given just the volume of questioning and actually angst."
So there is a sense of urgency, I asked?
"Absolutely," said Bill.
Nearly half of our audience are already actively implementing process improvements
This is based on the question: Which description best matches your organisation's process for identifying beneficial ownership?
The answers to this poll didn't surprise our panellists, who are dealing with these issues day in, day out.
"I would say that aligns with my understanding," said Keith, "because as Bill was alluding to earlier, as all the regulations are coming into effect in these key years, then the ongoing process to get in-line with compliance: it should be happening now."
On the processes themselves, Bill added:
85% of our audience agree that the process of beneficial ownership identification should be ongoing for the lifetime of a client or third-party relationship
This is based on the question: Where in the onboarding process do you think beneficial ownership identification should take place?
A central thrust of our webinar was the importance of operating efficient, thorough, ongoing processes to monitor the beneficial ownership of clients and third parties for the lifetime of one's association with them. But did our audience agree? Broadly, yes, it seems.
Added Bill: "I'm encouraged that it's an informed audience. [They're] struggling with the things that we've been talking about and yes, the earlier you deal with the issues, like who am I actually doing business with, the better it's going to be. [But] that's a point in time. Nothing is fixed, because tomorrow that organisation could be owned by somebody else, and so it has to be a continual part of the process."
Did Keith also find this reassuring?
"Yes, I would say so," he said, "and I'll go back to the point that Bill made earlier when we talked about triaging ... Yes, it is encouraging that we see [the proportion choosing] 'throughout the entire process'. But what they could do with the triage is really do it earlier. By scanning all this information earlier on it will help them triage and increase operational efficiency but mainly what's happening now, at least in financial institutions, is happening later or post the onboarding process."
So clearly there's still room for improvement.
Complying with regulations is the most popular driver but nearly 40% of our audience cite mitigating reputational risk or "doing the right thing" as their principal objective
This is based on the question: What is your principal objective for beneficial ownership identification?
Writing for a readership that spans the spectrum of regulatory scrutiny, I was particularly interested in answers to this question, which I was at pains to stress to the audience only asked for their principal objective; many will have had more than one. So I was intrigued by the nearly 20% of respondents who chose "doing the right thing to fight crime".
But the headline figure of 57.8% complying with regulations? "Well, we have regulations, so we comply with them," said Keith. "It makes sense to me."
Bill agreed, saying that "it's encouraging that regulations will always be drivers" but, addressing the relatively high count for reputational risk mitigation, added that he's "seen in multiple corporations [for whom] being on the front page of the Wall Street Journal or the Financial Times is even more important [or rather] not being there is even more important than the regulatory [factors]. But regulatory is what auditors are looking at, the compliance department is looking at, the CEO's expecting compliance, so that's understandable."
And is this reputational focus more likely to be attributed to people in the corporate space rather than FIs, I wondered?
"I would think that's reflective of industries," said Bill, "because certain industries at certain times are targeted, not literally. But in many ways an industry that shows some bad apples will be further scrutinised by regulators, so I think that's a reflection that those who are representing those more targeted industries might very well be [the] ones [choosing the regulatory answer]," with representatives of less scrutinised industries slightly more likely to focus on other considerations.
So what have we learnt?
Lots of things, I hope. And I'd urge you to watch a recording of the webinar. But, as Bill said in response to Question 2, "you need to start with structured information you can trust".
And for that, why not take out a trial of Orbis? Our database of 220 million private companies from all countries across the world includes structured, cross-border corporate ownership information, showing beneficial ownership according to users' chosen percentage thresholds. You can also use it to determine controlling ownership.
Recording of the webinar
This is available for free to view for the next 12 months.
A note about our expert panellists:
Keith Furst is founder and director of Data Derivatives, a New York-based boutique consultancy with a focus on technology for detecting and combatting financial crime. Last year Keith was flagged up as one of five new AML bloggers to watch by Transparint.com. So Keith provided much of the banking and financial institution – or FI – perspective.
And, from Bureau van Dijk's Americas office, where his focus is mainly on corporates, was my colleague Bill Hauserman, senior director of compliance solutions, who some viewers would have recognised from appearances in previous webinars, including our first beneficial ownership one last year, when we looked at some of the high-level concepts surrounding the subject.
And some notes on our audience of 1,000+ compliance professionals:
Participants in the Americas made up the lion's share, in part due to the timing of the live broadcast, but – in the week that the EU's fourth anti-money laundering directive or AML4 "went live" – there was a good showing the UK, Ireland and the rest of Europe, and a diverse spread of sectors represented, with fewer than half from the more highly regulated industries of banking and financial institutions, and a strong turnout from employees of general corporations.
Register to watch the webinar on demand