How compliance screening works and what databases are mostly used?

Over the past years, there have been many cases of frauds and criminal activities. And with the numbers on the rise, governments have made it important for companies to perform compliance screening for each and every person their company is getting involved with. This includes customers, business vendors, partners, and even the staff. Anyone can turn out to be a criminal and in such a case, the company can end up involved in the damage that one person creates.

Businesses have taken charge and are trying to manage the risk of malpractices through conducting inquiries and compliance checks. This helps companies confirm that the person they are working with is clear of any criminal record or behavior. This article will help you understand more about why your company needs compliance screening services and what databases are used to get the information about everyone.

Compliance Screening

Running a business doesn’t just mean earning and handling clients. It has become important to ensure that your business isn’t involved (directly or indirectly) to any criminal actions. And the only way out of this is by cross-checking all those being involved in the business. 

What is a compliance screening?

Compliance screening is a method through which you can confirm that the partners and customers that you are dealing with are trustworthy. Even though compliance screening is a process that initially requires information be obtained about a customer or a potential customer, it is more effective when it is appropriately set up to not only assess but also respond to the risk. There are certain red flags that help you to identify such risk, which are:

  • Terrorism
  • Criminal activity
  • International sanctions
  • Being politically active
  • Harming the reputation of the company

After the initial screening has been conducted, the company has to contemplate the action they will take depending on the risk. This action will minimise the exposure to risk that the company faces.

Why is compliance screening important?

Compliance background screening is a method used to pinpoint if a customer has a risk factor associated with them. The aim of this exercise is to find out if customers could be or are linked to unlawful activities such as bribery, money laundering, any financial crime or terrorism financing now or in the past. Any association with such activities will be flagged.

Your business can be exposed to huge risk if the company fails to screen the existing or prospective customers and partners to a database. The risk your company will face can range from minor inconveniences to huge financial losses, loss of business, damaged reputation, and sanction breaches leading to the business filing. This could even lead to the company facing legal proceedings.

Terminologies to Know

To understand compliance screening better, here are some terminologies that you should know about:

  • RDC or Regulatory Data Corporation: It is a D&B partner that specializes in solutions for regulatory compliances.
  • PEP (Politically Exposed Person): A PEP is a person who has been handed the responsibility of a prominent public function, or also can be an individual closely related to such a type of person (including the associates and family).
  • Entity: Subjected to the process of D&B screening, an entity is any company principal or organisation.
  • WLT (Watch Lists): Including the IRC & PEP, the WLT includes the watchlist of the foundational collection.
  • IRC: An IRC is a company which has been in tone with a list of individuals and associations and names of organisations with publicly known connections with the Iranian transportation, energy and military sectors.
  • GRID – (Global Regulatory Information Database): The Grid is a database of records with more than 17 million records which is updated daily on the known or suspected corrupt public or private sector figures, illicit financiers, organised crime groups, fraudsters, terrorist organisations, money launderers, politically exposed persons and dozens of relevant risk categories of organisations and persons.

How does Compliance Screening work?

Compliance check is a solution powerful enough to provide businesses with advance compliance background screening and keeping a check on suppliers and customers to guarantee compliance with the global regulations and the growing range of Global Anti Corruption regulations. This includes acts of bribery, foreign corrupt practices, and other various acts.

To address everything the compliance screening program needs, organisations have the most extensive and far-reaching compliance solution such as leveraging multiple databases, law enforcement sources, global watch lists, global news sources, and regulatory authority sanctions. All of which are updated on a daily basis. Such tools are used for compliance checks in the most effective way possible.

Compliance screening options

Prior to the initiation of the screening process, D&B information can be adjoined to the data supplied by the customer. There are options where you can incrementally gather the business or company names (maybe you can use Name Search of Hong Kong Companies, Business Name Search for all 50 States in the US, or similar online tool for other countries), trade styles, shareholders, principal names, and the entities that have a direct line between the company requested and the ultimate parent company. This is called upward linkage.

The customer can also opt to widen the range of the screening process to one that is based on the entire list of sources available including adverse media instead of following the basic process of WLT/PEP/IRC. Before coming to an outcome, the customer can also choose to have a skilled analyst perform a review on the screening result. This helps to stamp out the false positives. The customer can also choose the compliance monitoring service for the ongoing updates and alerts.

Single entity submission

A business name, the entity’s primary address (must include country, postal code, state, city, street) and the appropriate product code. All this information must be provided for a compliance registration. Additionally to confirm there is a complete and accurate screening, the customers are encouraged to provide any alternate business names, or known doing business as (DBA) of the company. On a successful registration a unique tracking number is provided.

Within the hour of submission the results can be retrieved for the requests of compliance screening that do not elect an analyst review. If required, an analyst review will usually take up to 2-3 business days to complete. In both cases for the completion status of the request, the retrieval operation can be polled.

Most Important Databases We Use for Background Search

For conducting a compliance background screening, we use these databases:

  • Australian Sanctions
  • United Nations Sanctions (UN)
  • Bureau of Industry and Security (US)
  • EU Financial Sanctions
  • Office of the Superintendent of Financial Institutions (CANADA)
  • OFAC – Specially Designated Nationals (SDN)
  • UK Financial Sanctions (HMT)
  • US Consolidated Sanctions
  • Department of State, AECA Debarred List (US)
  • Append Data & Alerts
  • Entity Attributes
  • Event Categories

These are some of the most important databases we currently use, additionally we have an extensive network of sources for data collection to be used in the screening process. All of which are updated on a daily basis to ensure that complete and genuine data is provided.

We commonly use these databases in hand with our various other databases to source updated and complete data from our clientele. Furthermore, we have a research team of experts who have been equipped with the latest technology such as Artificial Intelligence (AI) to effectively perform background screenings of a company. We are constantly improving our search range and the system, so if you have any suggestions, feel free to contact us.

Ready to Get Your Partner Compliance Check

It is important to get the best compliance screening services for your company. And to help you with it, Startuprbooks is here to offer the best compliance check services. We use the latest technologies and ensure that you get the most accurate report on each partner. Contact us to know more and book our services!