Nearly 12 million secret documents that reveal how wealthy and well-connected individuals stash assets in covert companies and trusts across the world to hide their wealth, avoid paying taxes, and (in some cases) launder money were leaked by the International Consortium of Investigative Journalists (ISIJ).

Leaks

The Pandora Papers reveal the complex networks of companies that politicians, public officials, fugitives, and fraudsters have set up across borders, which often result in the hidden ownership of assets. Individuals highlighted in the report created offshore shell companies in countries that make it possible to easily set up new businesses and trusts, have little to no corporate taxation, and the identification of company ownership is difficult and often impossible. 

Opaque Ownership

Assets owned in the US, Australia, the UK, or elsewhere, can be hidden via the utilization of a chain of offshore shell companies. While the ultimate beneficial owner (UBO) in actuality owns the aforementioned assets; on paper, the assets appear to be owned by the last entity in the chain. 

There are a variety of reasons as to why the clouding of ownership is desirable. Perhaps an individual is seeking to circumvent government sanctions, or decrease taxable assets, or a slew of other possibilities.  

Impact on Due Diligence

The wealth of information now available to financial institutions (FIs) will enable more accurate compliance audits throughout the business relationship lifecycle. The federally mandated know-your-client (KYC), know-your-business (KYB), and continuous due diligence audits can now benefit from the immense amount of data made available by the Pandora Papers. Is a client on a sanction list, watch list, or participating in illicit activities such as money laundering? Greater access to that information is now within grasp. 

External Data Updates 

There are roughly 2.94 terabytes of data from Pandora Papers. External data vendors must continuously update their data if they are to remain competitive — data quality is imperative. 

The Demyst team recommends that all FIs expedite their next round of due diligence assessments as the leaked information may or may not cause the re-evaluation of risk assessment decisions. 

Automation is the Answer

It should be noted that FIs who rely on manual due diligence systems may not be equipped to verify business clients quickly enough and may run the risk of non-compliance. 

Non-compliance can result in monetary penalties or even criminal investigations. The current environment demands an automated process that verifies business clients and flags for relevant risks in real-time. Bottom line, manual compliance audits may not be worth it; especially when automation is readily available to Demyst clients.

Demyst Makes it Simple

Keeping up with the ever evolving due diligence requirements is easy with support from the right technology.

The Demyst ecosystem helps automate due diligence processes by providing access to API-ready solutions, sourced and aggregated across thousands of global and regional data partners. 

Sign up for a free Demyst account and create a personalized API solution or utilize Demyst’s pre-configured APIs. 

Where to Start After Signing Up

For those seeking a personalized solution, Sayari Labs, NominoData, and Acuris are three key players in the space and are an excellent starting point. 

• Sayari Labs provides unparalleled corporate hierarchy data (legal/beneficial ownership, subsidiary, and related parties) from over 130 countries throughout Latin America, the Middle East, Eurasia, and offshore financial centers.

• NominoData helps clients with worldwide identity, compliance, and risk management issues by aggregating high-risk watch lists into a single, easily consumable data file. Additionally, they provide negative media screening. 

• Acuris is a provider of data intelligence for Anti-Money-Laundering, Anti-Corruption, and Cybersecurity professionals. (HMT, OFAC, EU, UN, Austrac) 

For those seeking an out-of-the-box solution, Demyst’s recommends using its pre-built Watchlist and Fraud Screening & Business Registration and Ultimate Owner Lookup API recipes.

Questions? Please reach out to Demyst’s international 24/7/365 support team via the in-platform chat or at support@demystdata.com.