Beneficial Owner & Compliance Screening: From Obligation to Business Value
Nov 2, 2020
Christian van Leeuwen
Financial institutions are legally obliged to screen new and existing customers. After screening, it must be clear that no business is being done with money launderers or criminals. Screening is also necessary to detect terrorist financing. Recent monitoring has shown that ‘know-your-customer’ screening by financial institutions is unsatisfactory. This can lead to high fines, damage to reputation and, in the worst case scenario, to the cancellation of the license. Insurers are also subject to this screening obligation. This screening can cost a lot of time and money, not least because it is often a manual process within financial institutions. With Beneficial Owner & Compliance Screening, FRISS turns the compliance obligation into profitable risk analysis.
May I do Business with this Customer?
For all agreements and financial transactions, banks, insurers, investment institutions and leasing companies must determine whether the other party is a legitimate one. The obligation consists of testing persons and directors of companies against sanction and PEP (Politically Exposed Persons) lists. In order to do this for a company, it is necessary to know who the Ultimate Beneficial Owner of the company is. Is there a parent company? What about sister companies or holding companies? Who is the natural person behind these companies? It is therefore necessary to check whether you are allowed to do business with the customer in question. As well as being an obligation, it is also an excellent opportunity to determine whether you actually want to do business with the customer.
The Challenges of Compliance Screening
A recent study by Deloitte shows that the biggest challenges to be faced in the area of compliance are:
Management buy-in for this obligation
Coordinating company-wide compliance
Conducting discreet screenings
Inefficient use of technology
In order to comply with legal obligations as well as to make a proper risk assessment and take fraud-preventing measures, various challenges can be overcome in a cost and time efficient manner.
The Benefits of Compliance Screening
At FRISS, we have created a solution to these challenges: Beneficial Owner & Compliance Screening. This screening ensures:
A continuous compliance process, so you never lag behind changes in screening against sanctions and PEP lists
Use of both mandatory and optional data sources, such as fraud registers and credit checks, which may be relevant to the process
Screening that doesn't stop at the border; foreign coverage can also be guaranteed
One environment in which all follow-ups are clearly recorded for the entire company, with an automatic audit trail
Standardized risk assessments with explainable results
Accepting and paying out on the right risks has a direct positive effect on the loss ratio. In addition to a healthier customer portfolio, this faster service for low risks also increases customer satisfaction when customers receive their settlement sooner. Employees can focus their attention on the things that really matter!
From Obligation to Business Value
The continuous and transparent implementation of automated screening obviously remains compulsory. Thanks to Beneficial Owner Compliance Screening, a clean portfolio can be built that contributes to a better operating result. Let's work together to ensure that this obligation becomes an opportunity for healthy growth.
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