4 Steps for Effective KYC and KYB Process – Compliance (Infographic)

KYC/KYB

Know Your Customer (KYC) and Know Your Business (KYB) are two fundamental aspects in today’s business. It is important to stay compliant and for your platform to provide a verification service for all customers. Visually see how, in only 4 steps, our identity verification service works for KYC and KYB compliance. 

For a full article on KYC and KYB, check out “4 Step Process for KYC/KYB – Using Electronic Identity Verification

Additionally, contact helen.lambrou@cedar-rose.com directly for more information on identity verification or visit our identity verification page here.

4 Step Process for KYC/KYB – Using Electronic Identity Verification

KYC-KYB

Know Your Customer (KYC) or Know Your Business (KYB) is the concept of identifying an individual, for KYC, or a business, for KYB, before entering a business relationship. The ability to verify the identity of a person or a company prior to any business arrangements or customer on-boarding can help you mitigate risks. KYC is often tied closely with Anti-Money Laundering (AML), you verify and confirm the identity of an individual or business in order to ensure a business relationship is not misused. One of the most efficient and effective tools on today’s market, to verify identity and to ensure compliance, is Electronic Identity Verification (eIDV). It is important to understand the specifications of eIDV and to recognise how it may be used to help with KYC and KYB procedures and protocols.

What is Electronic Identity Verification?

Electronic Identity Verification, or eIDV, is the process of using digital methods for standard and comprehensive KYC and KYB compliance checks. Private companies are increasingly using eIDV services to instantly confirm the identity of an individual or an entity, such as a company. Identity is confirmed via an instant cross-reference with a database, providing match or no match results. So how does eIDV help?

Electronic Identity Verification takes into consideration a person’s name, address, ID and other factors (depending on the country of origin), standard information that users input when creating accounts for forex, online gaming, for fintech companies, e-commerce sites and more. With the aforementioned information, databases are meticulously and, instantly, scanned until a result is found, either a match, and thus, a verification, or a no match, and thus, a non-verification. The user would then be able to proceed to create the account, or not, depending on the result.

The Importance of Identity Verification

Using a quality and trusted eIDV service to confirm identities will enhance your on-boarding procedures whilst staying compliant and mitigating risks. Naturally, consumers are unaware and unconcerned with business policy, data protection and regulatory pressures faced by businesses; they expect a quick and easy service when conducting business online. Using eIDV, your customers get an enhanced service whilst your company adheres to compliance and regulatory rules. Keeping your company compliant with identity verification will bolster trust and transparency for your company.

“Organizations of all types rely on identity for compliance reasons, to help mitigate the risk of fraud, and to build trust and safety of their services. With better identity frameworks, these organizations can lower costs, lower risk, improve their ability to expand into new markets, and better build trust with customers, employees, suppliers, third-parties, and all their connections.” – Trulioo

Moreover, reputational consequences are, arguably, at an all-time high, with the increasing importance of online media and news, it is important to have a strong and trusted reputation. Without indulging in proper compliance protocols your company’s reputation can be majorly affected, which may deter new business potentials. Data is another factor that has massively grown in importance over the last decade, and making sure data is properly handled and verified is an important role that each company must take part in, without it, you can lose all credibility and trust from clients, investors and more. Therefore, we must ask, how does the KYC/KYB process work?

Identity Verification Process for KYC and KYB

1)      Connect to a Database Provider

First and foremost, before you can even begin to verify data, you need to have access to a system, to a database, that has already collated and cleaned the data, ready to be used. However, you also need to know what type of data you are looking for. For example, at Cedar Rose, we specialise in the Middle East, Romania and Russia, we have quality data on individuals and companies for companies to use our database and perform identity verification checks. Connecting to our database can also be done via API, directly from our system to yours. The data has been translated and is available for checking in either native (eg; Arabic, Cyrillic) and Romanised characters.

2)      User-Side Input

Whether you are an e-commerce company, forex, gaming or more, your users will have to input data at some point of your process that will then need to be verified. Such data can be, first name, last name, address, identification data and so on, depending on the country in question.

3)      Identification Data Checked

The inputted data will then be checked across the database that you’ve connected through via API. Depending on the data inputted, the check will be for either KYC or KYB. Cedar Rose holds a database of over 160 million individuals and over 12 million companies; this data is instantly checked through eIDV.

4)      Instant Verification Results

The final step of the identity verification process is the result that is returned. If the inputted data was found in the database, then it is a ‘match’, and therefore you have verified the legitimacy of the individual or company. However, if it is a ‘no match’, then the individual or company has not been verified. The eIDV service returns one of these two results, for accuracy and speed. The user would then be able to proceed or not, depending on the result.

Cedar Rose – Electronic Identity Verification

Cedar Rose has been compiling data for over 23 years, from the hardest of regions, such as the Middle East where, in some cases, data is not even digitalised yet at the official sources. We have collected and cleaned this data and presented it in a standardised, easy to use and easy to access database for our clients. We offer vast data on individuals in the Middle East, Romania and Russia and data on companies across the MENA region. We source our data from a variety of places such as: official records, local records, public records and credit rating agencies.  Our databases are easily accessed via our API and are suited for international clientele, scalability, and for instant results. If you have a large influx of entities to be verified, our scalable database can handle your requests. We offer a service that can provide a smooth, efficient and most importantly compliant on-boarding process. If you’d like to know more about how we can help, contact Hannah.king@cedar-rose.com or check out https://www.cedar-rose.com/solutions/eidv for more information.

 

Written By Jack Evangelides, Marketing Executive

 

Stay up to date with our latest news here.

 

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Cedar Rose – Leaders in Know Your Customer & Entity Verification

Cedar Rose Leaders

Cedar Rose Positioned as Leader in Know Your Customer & Entity Verification in One World Identity’s 2019 Identity Industry Landscape

Cedar Rose Recognized for KYC & KYB Deterministic Data

New York City, New YorkNovember 21, 2019 – Cedar Rose today announced that it was recognized as a leader in Know Your Customer (KYC) & Entity Verification (KYB) by One World Identity (OWI). OWI is a market intelligence and strategy firm focused on identity, trust, and the data economy. Each year, OWI designs an Identity Landscape, providing a comprehensive and holistic view of leaders in the identity space. As the identity industry is rapidly developing, OWI’s landscape provides an unparalleled overview of how digital identity applications are evolving and the companies and markets shaping next-generation digital identity.

With over 400 companies and 35 market segments, the 2019 Identity Landscape visually depicts a growing and maturing industry. The new, unique landscape format allows companies to touch multiple market segments, reflecting on the dynamic nature of digital identity applications. The OWI team selected 415 identity companies from a pool of over 2,000 based on several factors.

  • Each company must be an identity company OR have a distinguishable line of business focused on identity.
  • Each company must be at least 3 years old or have raised $3 million.
  • Each company must have a functioning product in the market.

“Since 2017, the number of identity companies has more than quadrupled, from 500 companies to over 2,000,” said Travis Jarae, CEO and Founder of OWI. “With the wave of data breaches and privacy scandals, there is a rapid expansion of identity products and solutions. The OWI team interacts with identity companies every day, from startups to enterprise. We’re proud to share the Identity Landscape each year to distill how new companies, products, and solutions are shaping the future of identity.”

Cedar Rose has been recognized as a leader in Know Your Customer (KYC) & Entity Verification (KYB). The company provides business intelligence solutions which include electronic identity verification for both people and businesses. Cedar Rose has uniquely covered one of the more difficult geographical regions for KYC and KYB including many countries in the Middle East and North Africa as well as Russia, Romania and Turkey. The company has also recently been recognized by the European Business Awards as “Ones to Watch” and awarded the National Winner prize for Digital Technology, with the final judging to take place in December.

Antoun Massaad, Cedar Rose’s founder and CEO said, “The region we have traditionally been covering for business intelligence, Know Your Customer and Entity Verification data has certainly had its share of challenges and we are working hard every day to not only increase our coverage in these difficult regions, but to expand our services to offer global entity verification very soon. To be recognized by organizations like One World Identity and to be included on their 2019 Identity Industry Landscape is testament to the hard work our teams are putting in every day. It makes me very proud for Cedar Rose to be included amongst the top companies in the world for our KYC and KYB identity verification services as well as for the digital technology that enables them. Having traditionally been providing credit reporting and due diligence services for over 20 years, electronic identity verification is a fairly new line of business for us since 2016 and I’m glad that we grasped the opportunity to be at the forefront of this exciting new industry.”

Digital identity is the core of digital transformation. From personal to professional applications, identity is the foundation for how we connect, engage, and interact in the digital economy. As there is increasing consumer demand for privacy and security, digital identity is no longer a nice-to-have; it is a pillar of success. The OWI Identity Landscape is a tool to help companies keep track of market growth and trends and understand the strategic importance of digital identity moving into 2020 and beyond. OWI will be releasing a more detailed research report delving into the details of each market segment and how companies within the industry overlap and intersect in upcoming months.

Download a complimentary copy of OWI’s 2019 Industry Landscape at www.oneworldidentity.com/landscape.

About Cedar Rose: Cedar Rose is an innovative, digital technology focused business intelligence agency providing company profiles, credit reports, due diligence, data subscriptions and electronic identity verification services for companies and individuals. The company has traditionally covered the Middle East and North Africa, though has been expanding to offer global coverage in many services over recent years. Cedar Rose was founded in the UK in 1997, and is now based in Cyprus and Lebanon.  

About OWI: OWI is a market intelligence and strategy firm focused on identity, trust, and the data economy. Through advisory services, events and research, OWI helps a wide range of public and privately held companies, investors and governments stay ahead of market trends, so they can build sustainable, forward-looking products and strategies. OWI was founded in 2015 and is the host of the KNOW Identity Conference that takes place in Vegas April 5-8, 2020.

Keep up-to-date with Cedar Rose’s latest news here.

Electronic Identity Verification – A First Digital Identification Tool for the MENA Region

Compliance

A technological paradigm shift that the world has experienced in recent decades has caused a mass transformation in today’s society. The operations of business and social lives for everyday people has become more automated, efficient and digital. One key aspect that had to change to keep up with technology is how entities can verify individuals for safety and compliance. The onset of electronic Identity Verification (eIDV) was necessary and an inevitable tool in the digital age. With ever-increasing profiles and identities in the online realm, businesses need to make sure that their customers and clients are real and, importantly, that they can prove they are real. Identity verification and confirmation is pivotal for the 21st century.

Financial Compliance

The birth of electronic Identity Verification was, and is, mostly utilised by financial institutions and those in the financial industry, to confirm their user’s identities. Digitalisation in parallel with international business helps companies stay compliant. With newer technologies comes updated and modernised laws and regulations. A recent example would be the release of the General Data Protection Regulation (GDPR), which was implemented in 2018. This regulation was born out of the mass quantities of data on individuals that is available online. Technologies such as Cloud, APIs, Blockchain, are all examples that show a necessity for GDPR, to protect and keep private user data unless otherwise stated.

Electronic Identity Verification is a practical appliance that supports a modernised regulation in retaliation to growth, in our digital world. Companies in gaming, forex, banks and any institution where one needs to register and create an account will need a form of identifying the legitimacy of their customers. Therefore, with this demand in the market for verification, eIDV was born. A verification service was readily available to help companies perform Know Your Customer (KYC) and to ensure compliance, however, this service, for a long period, was only available across the United States and Europe. In countries where data is less readily available, in a different language or, in some cases, not even digitalised, electronic identification services were scarce.

A Turning Point

2015 witnessed the first ever electronic Identity Verification service for the Middle East and North Africa (MENA) region, released by Cedar Rose. After a surplus of 20 years in collecting data from the MENA region, translating and transliterating to make it available in a recognised format. This long awaited tool revolutionised compliance for companies to utilise and verify users across MENA. Moreover, Cedar Rose’s eIDV identifying service is also offered via one single, flexible, API.

Any business can simply integrate with Cedar Rose’s database for instant match/no match results on individuals across the MENA region and beyond, with over 160 million, individuals are readily available for verifying. Cedar Rose offers an expansive database of individuals with instant results to aid financial institutions verify identities. Don’t get complacent, get compliant!

Written by Hannah King, New Account Manager

 

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

API – An Insight into Data-Sharing in the 21st Century

API

Application Programme Interface, or as most know it, API, has revolutionised the way the world operates and has provided efficiency beyond belief. The inherit design of this application software acts as the backbone of modern connectivity, providing and utilising efficiency, reliability and speed. API provides alternative means to achieve outcomes, meet demands and diversifies the way Business-to-Business (B2B) operations are carried out. Astonishingly, according to TechCrunch, Salesforce generates 50% of its revenue via API, eBay nearly 60% and Expedia an unrivalled 90%. This relatively new concept, a technological marvel, has gone further than most would have imagined. It is important to understand the principles and benefits of APIs and what they can, or already do for your company.

The What
API, on the surface, is complex software with a lot of technical jargon attached to the matter. However, after understanding the practicalities and the fundamentals of Application Programme Interfaces, it becomes more evident what they intend in doing.  In layman’s terms, APIs allow one piece of software to make use of the functionality or data of another. API functionality’s main purpose revolves around B2B activity. This machine to machine interface can transfer data, in real time, and provide an array of instant possibilities and efficiencies. Importantly, APIs help create seamless networks in order to improve value transfer with suppliers/vendors, clients, partners and employees.

Incredibly, since this innovation become available in 2005, the last 14 years has shown an astonishing rise in usage, illustrating how necessary and important the day-to-day use of APIs are. Below is a table of the growth of Web APIs submitted to the ProgrammableWeb directory from 2005-2018.

API Growth

The Benefits
APIs have the functional capacity to perform a multitude of tasks that can be utilised from business to business. From sharing data and processes to real-time results, APIs are a heavily relied upon software. In a nutshell, an API can help create seamless networks that improve value transfer with clients, suppliers and more. Additionally, some core benefits are:

  1. Ease of Access – In order to provide the best customer service you want to make life as easy as possible for your clients. Well, APIs can enhance the user experience and save time making your customers jump through hoops of login forms, order forms and alike. If an API is set up for your end user, integrated into their application, you are essentially removing any barriers from them using your service. This may just generate a long-term client and a happy one at that.
  2. Innovative – In some cases it is possible for API providers to incorporate functionality that end-users have adopted and extended themselves. Through traditional web applications and user experience you have pre-determined how your service is to be used. However, via API, flexibility and innovation may open up a variety of other means for your users to engage in. This could create whole new industries and verticals that you could service.
  3. On-Demand – The real-time applications of APIs provide a platform in which your users can utilise the most efficient of services. An automation of requests and responses will eradicate any roadblocks in traditional service. Your business will be digitalised and primed to scale with the functionalities that an API has to offer.
  4. Customer Analytics – Streamlining a focus on services you provide can allow your company to more directly analyse and enhance to better suit your users. User experience may depend on how the users interact with applications and time may be overspent scrutinising these fine details, rather than working on the actual services that you provide. Streamlining your focus would enable you to understand exactly what your customer’s want, allowing you to better plan your business’s strategic road map.

Cedar Rose’s Availability
Cedar Rose has always taken pride in being one of the most innovative and up-to-date companies in its field. Thus, we heavily endorse the use of APIs to provide a bespoke service to our clients on a daily basis. As we offer data all around the world to a wide array of clients at all hours of the day, we need to make sure that we have accessible services for the greater benefit of everyone. Henceforward, we have enhanced our API capabilities to allow for instant services for credit reporting, risk assessments, due diligence and electronic identity verification. We believe that our customers deserve the best, and when you need critical data for urgent decision-making matters, we can provide you with the relevant data-transfer in a fast, streamlined and secure approach.

Visit www.cedar-rose.com today to see how we can help you.

Written By Jack Evangelides, Marketing Assistant

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Math, Artificial Intelligence and Data – A Whole New World

Math - Machine Learning

Traditionally, a love for math used to be associated with someone you would call a ‘nerd’, however, technologically revelations have proven math to be a fundamental concept in the 21st century. In our data-driven world, companies and corporations are all using math, formulas and computations to ensure optimal efficiency. Without the use of math, there would no artificial intelligence (AI) and no computer science, we would be stuck in a world of slower and more mistake-prone business. Math, AI and automation provide solutions to time-consuming and complex problems where humans would be much less efficient in resolving. So what is the connection between math and AI?

How and where is Math used in Artificial Intelligence?  
Some of the fundamental topics that math holds for machine learning are:

  • Linear Algebra
  • Calculus
  • Probability
  • Optimisation
    • Heuristics
    • Iterative Methods

These areas of math each contain a multitude of further, and much needed, topics to fully understand machine learning. We may not realise, but every day we face examples of AI where math has contributed highly towards. From the most menial of examples such as sending certain emails to spam or, on the other end of the spectrum, self-driving cars, AI and machine learning is all around us.

“The need for remedial math seems widespread enough that even a simple Google search for ‘calculus and artificial intelligence’ turns up a bunch of blogs and additional courses on how to understand the math underlying these assignments.” Forbes, 2019

Math - AI - Data

A few years ago, Apple’s Siri and Tesla’s self-driving cars were something unthinkable or impossible to have. Today, Machine Learning and Artificial Intelligence are unlocking capabilities everywhere around the world; businesses are learning to use new technologies to create intelligent products, personalised experiences, and smarter business functions. What are some examples of artificial intelligence in business?

Business AI
The world is becoming faster, smarter, more complex and more efficient, and we owe a big part of this to artificial intelligence and machine learning capabilities, which all derives from math. Let’s have a look into the everyday AI applications that is commonplace for businesses:

  1. Spam filters,
  2. Personal Assistants (Siri/Cortana/Google),
  3. Automated online chat responses,
  4. Automated insights – used from collated data from a company
  5. Smart searches – according to an individual’s history
  6. Product recommendations,
  7. Fraud detection,
  8. Personalised news feeds,
  9. Language recognition,
  10. Ad targeting.

These are only a few applications of AI that we experience in our day-to-day routines. The evolution and application of math to AI has been an incredible phenomenon and it continues to enhance every day. So the main question is:

Are you using Machine Learning or Artificial Intelligence to add value to your business?

Here at Cedar Rose we have used both Machine Learning and Artificial Intelligence to help us process, translate, transliterate, organise, standardise and analyse large amounts of data. It is our love of mathematics, our close attention to detail and our drive to be the best that keep us ahead of the game.
Finally, for Nerds everywhere now is our time to shine!

Have you seen our latest article on fraud?

Written By Angelique Assaf, Data Strategist

Sourced Image: Freepik

 

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Guide to doing Business in the Middle East – Tips, Tricks and More

guide to MENA

Cedar Rose has been active in the Middle East now for over 20 years, instigating business, gathering data and setting-up one of our offices in Lebanon. This article aims to provide an in-depth guide of how you can enact business in the same region. The Middle East is a vast region which has been, in recent years, both highly prosperous and sometimes unpredictably risky, but opportunities abound for those prepared with the right information. More and more companies each day are looking to this region for new business. However, it is not advisable to dive in without knowing how deep the water is. It is important to learn the facts, to understand the issues that can arise and to be prepared.

Let’s get down to business
It is no secret that extracting data and information from the Middle East is no easy task – there is a widespread culture of privacy. From factors such as decentralised data sources, free zone jurisdictions, language obstacles and a lack of advanced technology; there are hefty barriers that need to be worked around in order to have access to the right kind of information and statistical data to be successful in the region. Although the Middle East is a developing and dynamic hub for investments, it necessary to prepare yourself with the right knowledge that can optimise your decision-making for the better. This region has always attracted foreign business – partly due to low taxation – and relies heavily on imports because of a lack of diversity in local raw materials. So, opportunities abound, but what do you need to know to instigate business within the Middle East? Follow this step-by-step guide that may help you mitigate risks.

1. Know the Country

The Middle East spans over numerous territories and nations collectively. These countries, in order of population size, traditionally include Egypt, Iran, Turkey, Iraq, Saudi Arabia, Yemen, Syria, Jordan, United Arab Emirates, Israel, Lebanon, Palestine, Oman, Kuwait, Qatar and Bahrain. In some definitions, the small island of Cyprus is also included. The political situation within the region can be volatile and there are often extreme tensions, if not wars between one or more countries, civil wars between factions or formidable tribal disagreements as well as equally strong alliances. It may be wise to have a guide with you whilst you navigate around a country, to help you get to where you need to be. Judging the region as a whole is naïve as there are vast differences between economies and infrastructure, as well as GDP from country to country. Qatar, for example, has a GDP per capita in advance of $70,000 whereas in Yemen it is less than $600, so studying the particular market of interest is wise.

2. Know the Language

The Middle East is, perhaps, the most linguistically diverse region on the planet with more than 60 languages spoken, some of which include Arabic, Greek, Turkish, Hebrew and Kurdish. Therefore, instigating business may raise language barriers which would require expert translators in order to mitigate the risk of misinformation. However, language barriers shouldn’t stop you from a great potential business opportunity, so it would be wise to do your due diligence on the area you wish to enact business and find solutions to any potential language restrictions. Overall, English and/or French are widely spoken as second languages by locals within most countries of the Middle East and due to the large population of foreign nationals working and residing in the region; English has become widely accepted as the predominant business language. Arabic is widely spoken, but the dialects vary enormously from country to country so whilst the written language is the same, the spoken language may be difficult to understand, between one country and another.

3. Know the Technology

Depending on where your company originates from, there is a high possibility that there will be technological differences. Although the Middle East has recently seen a technological uproar, there are many nations in the region that still lack ‘common’ technologies. Whether it is automated border control systems on entry of a country or the requirement for manual submissions (in person) of tax documentation, it is important to understand what to expect. Not all countries in the region have VoIP, fast, reliable internet or even 24 hour electricity, whilst others are leaps ahead.Limitations in technology can halt business and be a major blockade for any success; therefore, it is important to assess the situation before diving in.

4. Know the Culture

Cultural differences may be a big factor in whether you land that deal, merge with that company or complete that agreement that you so desperately need. For example, understanding the difference in working weeks, it’s common for western countries to work a traditional Monday-Friday, 9am – 5pm. However, this is usually not the case for the Middle East, so it is necessary for communication and transparency to understand your client’s working culture. Many companies in the region do not work Friday or Saturday, but they do work on Sundays. Others may close for lunch from 1pm to 3pm or have different summer and winter hours. Many government departments do not open at all in the afternoons.

Additionally, religion plays a big part in this region with certain holidays or customs that different nations respect; it will be beneficial to pre-emptively know what these are so you do not get caught up in confusion. Communication is one of the biggest factors in business, having strong connections and transparency can help with business. However, customs may vary in the Middle East, from greetings to hospitality expectations, understanding this may help your business perform better in certain regions. Face-to-face visits require a lot more preparation in order to successfully navigate your business in the Middle East; moreover, visits ‘in person’ are highly appreciated throughout this region.

5. Know the Corruption Landscape

Corruption exists in all countries in some form or other, but you only need to glance at the map on Transparency International’s Corruption Perceptions Index to see that the Middle East has a very high perceived level of corruption. Corrupt practices are commonplace in many countries and it is wise to use a reputable and highly recommended accountant and auditor to help keep your company on the right side of the law when conducting day to day business. So as not to tarnish your company’s reputation by trading or partnering with known or perceived offenders – and these may well be accountants, lawyers, highly successful business people or government officials – it is always wise to conduct reputational due diligence.

Regional Experts – Cedar Rose
In order to utilise what the Middle East has to offer it is smart to use a company that has experience within the region and the know-how that can generate opportunities and guide your business to success.

Cedar Rose has been in operation in the Middle East for over 20 years, established originally in the UK and now residing in Cyprus and Lebanon and can guide you to success. Whether you need company credit reports or more in-depth due diligence or reputational investigations, Cedar Rose can provide high quality data and reports that can help you instigate business. Our experience and knowledge will help you mitigate risks within the region and our “boots on the ground” approach can guide you in the right direction.

The Middle East offers a myriad of opportunities for great business, but it may require stepping out of your comfort zone to a complete new region and culture.

Check out www.cedar-rose.com today and see how you can utilise our services for the Middle East or give us a call on +357 25 346630 to discuss your particular requirements.

Enjoy our guide? Why not have a look at the importance of company credit reports 

Written By Jack Evangelides, Marketing Assistant

 

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Data Reliability – Is the data in my credit report up-to-date?

Data Reliability

The reliability and freshness of the data contained within is of fundamental importance when investing in a business credit report, especially if you are buying in bulk through a package or subscription.
However, there are fundamental differences between the availability of commercial data in the developed world and that in developing countries, so it is wise to ensure you are aware of potential pitfalls when purchasing international reports.

The composition of a robust business credit reports relies on five overriding factors:

Firstly, the origin of the basic  registration and activity data, for example: whether it has   been extracted from official sources or collated from other less reliable  sources  such as business directories, social media  or the subject’s website. Not every country has commercial registration data available online and if it is online it may be in the local language and may not be free of charge to access.

Secondly, the date the data was last updated is crucial. Whether it has been updated within 24 months, six months or was a fresh investigation will make a huge difference. It is advisable for the data to be as updated as possible, especially when you’re dealing with extending large amounts  of  credit;  but  registry  information  is usually only updated annually or even less frequently in many countries.

Financial statements add great depth of knowledge to a credit report but these are not available in several countries, simply because filing of accounts is not a legal requirement. In any case, it should always be noted that accounts, even if available, are merely an assessment of the previous year or quarter.

The next important factor is perhaps surprisingly the original language of the data. Misinterpretation    or    incorrect    translation of crucial information can lead to errors in correct identification of a company, or overlook important links to other companies, directors or shareholders because of mistranslation that may affect the overall risk analysis. Correct matching of international standards such as activity codes (UKSIC/NACE) or International Financial Reporting Standards (IFRS) is essential for the data to be transferred automatically into various formats around the globe – especially important if receiving credit reports via API or CRM (system to system applications).

Lastly, an informed and accurate credit opinion is a key factor which relies on all of the above.

Consequently, due to the variety of factors that a reliable automated instantly available credit report should contain, we must recognise the differences in the developed world with data availability from developing countries.

MIDDLE EAST
In the Middle East as well as other regions there are strict limitations on non-publicly available information that can be lawfully obtained. One of the more serious barriers to data accessibility is the practice of offshore registration and free- zone entities. The latter concept is evident in the Middle East, and, more specifically, the United Arab Emirates (UAE). When a company registers with free-zone authorities, they may well be seeking the higher degree of secrecy that these zones can offer. Through legal protection of ownership rights, free-zone jurisdictions uphold strict limitations increasing the difficulty to draw data on these companies. Free zones offer complete confidentiality, where beneficial owners are offered anonymity and guaranteed no disclosure of Ultimate Beneficial Owner (UBO) to local authorities. The UAE contains over 100 free trade zones, each with their own laws and jurisdictions. Free-zone companies, in this respect, parallel with offshore companies, especially in the sense that they are not subject to federal commercial law and are considered outside the country’s jurisdiction.

There are other obstacles too. In Egypt, for example – home to around 100 million people and reportedly one of the fastest growing economies in the Middle East company registration data is still held on hand written paper registers or in PDF files; not even digitised let alone structured, so bringing this data online is a slow and laborious process. Obtaining copies of corporate records involves sending someone in person to find and photograph the correct page, so knowing the commercial register number or the date of incorporation in advance is mandatory.

OVER EXPECTATIONS
Automated data has revolutionised the business intelligence scene, providing fast, efficient and reliable data at the click of a button. However, have we taken for granted the efficiency of automated data in the developed world? Do our over-expectations of this automated data blind side us to the harsh realities in developing countries?

Automated data throughout the developed world allows companies to make practical assessments of companies in a timely manner. Company registration data may be instantly updated via data feeds or system applications (APIs), so if the registered address, company directors, shareholders, activities, legal status or financial status change this will automatically update in your credit report download, subscription or credit file. There is also a culture of information sharing through trade references and filing of financial statements, as well as easy open access to mortgage charges and insolvencies.

So how does automated data in the developing countries compare? The scoring system is based from 0-100 and takes into account all available data from official sources according to OpenCorporates which is tackling the excruciatingly difficult task of bringing company registration data for the whole world online. Data fields that generate these scores include: freely searchable, freely available, director’s information, accounts information, shareholder information and licensing (open or not). We can take the first comparison, between the UK and the UAE, and assess that the UK – through Companies House – provides much more access to company data from official or free sources than the UAE. This is due to many reasons including the free-zone entities, but also a regional and historical culture of privacy. We must remember also, that the UAE in its current form is not yet 50 years old and while technology is advanced, bureaucratic processes are still lagging behind the UK and financial filing is only required for publicly listed companies.

Commonly throughout the Middle East commercial registration data is not centralised, not structured and often only available on official sites in Arabic or the local language.

Data Graph

THE WAY FORWARD
At present, until more data is made available   to credit reference agencies automatically and instantly worldwide, a freshly investigated credit report should always be the best route way to receive the most up-to-date and reliable information.

Yet when you conduct business with developing countries there are some extra measures that may need to be taken. It is important to use an experienced credit agency that understands the region and has the expertise to acquire and translate data from the correct sources. If using a local agency, ensure they divulge the date of the data fields provided. When relying on automated credit risk scores, be confident that there is enough information provided in the report for an assessment to be accurate or ask your credit reference agency which quantitative and qualitative factors they use in their risk analysis to be sure they provide accurate scoring.

While there are still vast differences in the way data is collected, there are also innovative companies that are leaps ahead of the local governments making the best use of technology and working extremely hard to close the information gap to bring the world’s credit data online.

This article was published by CICM in their Credit Management Magazine. 

Head on over to our newsroom for more invigorating articles. 

Written By Christina Massaad, Managing Director

Sourced Image: CICM

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Quality of Data – The Problems with Mismanagement

Quality of Data

Data is used in our everyday lives, whether we know it or not, we are part of the process. Every message we send, every video we watch or every photo we upload online; it is all part of a process in which data is being transferred and stored. However, data is by no means limited to our social lives. For every company, with every email or service provided; there will be a big part that data plays. So what are the risks of poor quality data? Well in your social life they are quite minor in comparison to the business world. To err is human, thus, some repercussions of data mismanagement may have disastrous effects. Data entry jobs are rising with the amount of data transference and management in the current age we live in, which therefore creates more poor quality data. But, of course, to combat poor data there are also data quality analysts who essentially check and ‘clean’ poor data. There have been many cases of poor quality data that have had major effects. From cutting the supply of products to certain countries to incorrect payments of invoices, data mismanagement causes disruptions day-to-day.

Data Mismanagement
The amount of data is increasing day-by-day and, as expected, there will be mistakes. Despite peoples best efforts to manage data, to clean data and do ensure its quality, there are still plenty of mishaps that may have unfortunate consequences. Data needs to be:

  • Accurate
  • Relevant
  • Complete
  • Understandable

Without these four concepts, your data will be at risk of costly mistakes. According to the 2019 Global Data Management Benchmark Report, the main causes of current customer/prospect data inaccuracy are:

  1. Human Error – This accounts for 50% of mistakes.
  2. Too many Data Sources – 39%.
  3. Lack of Dep. Comms – 31%.
  4. Inadequate Data Strategy – 30%.
  5. Current Relevant Tech – 26%.

According to this report from Experian, these are the 5 biggest contributors to a lack of data accuracy in 2018. In 2016, research found that poor data cost the US economy alone $3.1 trillion. Furthermore, it is estimated that Data Analysts waste 50% of their time correcting mistakes and cleaning data from sources they don’t trust. Big-data companies, every day, work to analyse and improve operations; however, with the repercussions of poor quality data, the possibilities of utilising it are bleak. The risks do not stop at big-data companies, wherein organisations believe, on average, that 29% of their current customer/prospect data is inaccurate, enforcing this lack of trust and time-wasting efforts.

It is evident that data mismanagement is a problem that has risen parallel to the growth of technology, yet this has also paved the way forward for newer day-to-day issues throughout the business landscape.

 The Difficulty of Data
Furthermore, in addition to poor quality data, there are certain procedures that can make it difficult to attain the necessary data for you or your company. For example, within the Middle East, especially the U.A.E, there is a huge free-zone company presence, adhering to alternative jurisdictions other than the situated company. This has created major issues for many businesses across the globe, the difficulty of drawing data, verifying clients and verifying compliance. Free-zone jurisdictions prove to be some of the most difficult access points to attain information from and require a team of dedicated and experienced professionals to gather the correct data, similar to offshore jurisdictions in other countries.

Thus, data mismanagement is also aligned with data-barricades such as those from free-zone companies. Within the credit industry there have been many examples of where data from particular regions, especially the Middle East, has been difficult to source. The issue of free-zone restrictions may prove to be highly problematic for you and your company. It is important that, when dealing with scarce data, you either research or hire (preferably) a dedicated team who have the know-how and expertise to excavate the data that you wish to find. If not, you may end up with wrong data and this may have fundamental drawbacks on your business and your reputation. Data is such a fragile concept that even registries and local authorities, who hold public data, can often make mistakes in their data entries, especially where translation is involved at the point of registration.

Data Experts – Cedar Rose
With over 20 years of experience, Cedar Rose has learned the required techniques to know how to produce high quality, correctly translated and source graded data. Data, on the surface, is the same for everyone, yet when correctly and expertly managed, data can be utilised in many ways. It can be used for analytical reasons; it can be sold to those who do not have the resources or experience to collect data and many other ways that it can be utilised. Additionally, Cedar Rose has been in operation within the hardest of regions, the Middle East and North Africa, across all of our years of experience. Our teams have learnt the necessary procedures of how to gather data, how to organise it and how to present it to our clients in standard, internationally acceptable formats to become the highest quality necessary.

Cedar Rose effectively has data on over 12 million companies and 23 million individuals, translated and transliterated for our client’s best interests. Everything we have and more is available on our database and accessible from one single access point. Data we hold can be viewed and downloaded, and fresh investigations can be ordered via our database, CRiS. We offer 5 different levels of subscriptions to CRiS, in which you can access, analyse and utilise. The highest level – Directorship & Shareholding – includes full link analysis within our database, which displays different connections between companies and individuals, this exclusive feature can help your company strategically plan and assess for the future as well as tracing ultimate beneficiary owners (UBOs).

Contact nicole.konstantinou@cedar-rose.com to arrange your free trial of the CRiS database today.

Data can be utilised in numerous ways, read up on our article concerning data-driven sales.

Written By Jack Evangelides, Marketing Assistant

Sourced Image: Freepik

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Compliance is Key: The Dangers of Non-Compliance

Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance have drastically changed the way the world conducts business, for the better. KYC is the process of fully verifying the identity of your clients and with this you are able to secure your business dealings by trading only with legally registered entities. Consequently, compliance with AML is essential in order to prohibit the practice of generating income via illegal methods. Action is generally taken by contracting experts to conduct meticulous due diligence investigations when institutions issue credit or open accounts for customers. This ensures that you know your customer and, consequently, mitigates the risks of on-boarding clientele that may be laundering money or already sanctioned.

Non-Compliance
The consequences of not conforming and complying with KYC and AML procedures can be detrimental on a business. The policies are rightly taken very seriously, thus, compliance is a necessity. There have been a multitude of cases where businesses have failed to comply and they have suffered the consequences. Over the last 10 years there have been fines of over $25 billion for non-compliance with AML and KYC regulations.  

Compliance Chart

 

The US is held accountable for an estimate of 44% of all AML/KYC fines, however their fines total a staggering 91% of the global fines issued indicating extremely strict enforcement. Currently, the Middle East has the fewest financial reinforcements of all regions but is by no means unaffected or unregulated. Institutions that require compliance with the regulations, such as banks and financial companies, have suffered many such punishments over the last decade, and the very magnitude of fines should spur a warning to all compliance officers.

One case that proved to have hefty consequences when failing to comply with AML was the U.A.E-based bank, Mashreqbank PSC, New York Branch. The bank was fined $40 million by the New York Department of Financial Services for AML breaches. Further repercussions of this incident included, under a consent order, having to hire a third-party compliance consultant to oversee deficiencies in regards to compliance. The bank was also subjected to further scrutiny of past actions. 

Another case, on a smaller scale, relates to the former CEO of Sonali Bank (UK). This was conducted by the Financial Conduct Authority (FCA), who fined the individual £76,400. The case was reviewed from 2014 to 2016 and concluded that the CEO failed to take reasonable steps to mitigate the AML risks from a culture of non-compliance, in addition to a failure of oversight on the procedures. 

Do your Due Diligence – The Cedar Rose Solution
The crack down on AML and KYC regulations has proved to be a robust system, with financial regulators stopping at nothing to ensure companies are participating in the right course of action to prevent illicit activities. Before you go into business with someone, make sure you do your due diligence, investigate your clientele in line with KYC and AML regulations, otherwise it may be your business next. Our investigative due diligence reports provide meticulously gathered and professionally detailed information on companies or individuals. From Enhanced due diligence reports to Customer due diligence investigations, Cedar Rose offers the helping hand you may need to comply with KYC and AML regulations. 

We are experienced in the Middle East and North Africa (MENA) region for over 21 years and now cover several developing countries where information has traditionally been hard to access. We are the go-to company for the Middle East (including Iran, Cyprus and Turkey), North Africa and India and are chosen due to our expertise, professionalism and trusted quality. Don’t take the chance of not conducting the correct measures for compliance, the effects may be irreversible – not only financially but to your reputation too.

www.cedar-rose.com

Gain a better understand of Cedar Rose through our Newsroom.

Written By Jack Evangelides, Marketing Assistant

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***