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The Risky Business of Outdated Beneficial Ownership data

By Magda van der Lith – Head of Product at NGA

Covered in this article:

– We highlight the risks companies incur by using outdated or incorrect beneficial ownership data.

– Examining the varied accessibility of ownership data across jurisdictions and its impact on compliance.

– Showcasing the shift to streamlined solutions for accurate and up-to-date beneficial ownership screening.

The problem

Based on NGA’s internal research, over half of companies unknowingly invite risk and waste time fixing errors by using outdated or incorrect beneficial ownership data, creating a ripple of challenges that misguide decision-makers and threaten compliance integrity.

How accessible is ownership data across different jurisdictions?

The availability of ownership data varies considerably among countries due to differing regulatory frameworks and transparency standards.

For instance, EU nations are advancing towards transparency with public UBO registers mandated by the 5th Anti-Money Laundering Directive, while many other regions have opaque systems.

This disparity challenges businesses aiming to meet international standards and fosters financial malfeasance.

In South Africa, companies had until 1 October 2023 to comply with beneficial ownership regulations, with a grace period extending to their next CIPC annual return if they missed the deadline, showcasing a step towards greater transparency.

The perils of stale ownership data

In the fast-paced business world, data is the compass that guides decision-making. However, relying on outdated data sources for beneficial owner screening is akin to navigating a storm with a faulty compass. It’s common for companies to unwittingly use stale data, exposing them to regulatory backlash and reputational damage.

It’s also not uncommon for companies to get snared by the marketing or brand allure of data providers, only to discover that the advertised up-to-date information is actually outdated, further impairing the risk landscape.

The reality is that the corporate world is in a constant state of flux with leadership changes, mergers, and other significant events altering the ownership dynamics frequently. The absence of up-to-date, accurate data can lead to a company harboring relationships with entities involved in illicit activities.

 

The Need for Beneficial Owner checks

The act of identifying and verifying the beneficial owners of firms you engage with is a cornerstone of modern compliance protocols. Regulatory bodies across the globe are tightening the noose on money laundering, tax evasion, and terrorist financing. Consequently, various jurisdictions now mandate companies to maintain a detailed register of beneficial owners and share this information with relevant authorities.

Compliance with beneficial owner disclosure norms is indispensable for financial institutions, legal entities, and trusts among others. The landscape of beneficial owner compliance isn’t just a legal hurdle but a moral obligation too, creating a culture of transparency and accountability in the corporate sphere.

By embracing rigorous beneficial ownership screening practices and leveraging cutting-edge software, companies are not only safeguarding their interests but are also contributing to a more transparent and ethical global business landscape.

 

How to correctly screen and monitor beneficial ownership

Having the right tool at your disposal can catapult firms beyond outdated, tedious manual screening processes sprawled across multiple websites or software solutions.

The shift from juggling several tools to embracing a single API like RiskSecure is transformative. RiskSecure consolidates all these checks into a single streamlined package, making the intimidating task of beneficial ownership screening much more approachable and less taxing on resources.

This way, companies can channel more energy into their core operations, assured that they are aligned with compliance mandates. Moreover, RiskSecure is primed for real-time examinations of officers against a spectrum of risk databases including PEP (Politically Exposed Persons), Sanctions, and Adverse media via API or SaaS solution.

NGA also makes every effort to source up-to-date beneficial ownership data, enhancing the accuracy and reliability of the screening process.

Beneficial owner screening is not merely about ticking off regulatory checkboxes; it’s about nurturing a business environment that embodies transparency, accountability, and resilience against the dark tides of financial misdeeds. Leveraging the prowess of up-to-date data through isn’t just a nice to have, it’s essential.

Contact NGA to assist in your Beneficial Ownership screening, so you can focus more on your business.

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