Dun & Bradstreet Beneficial Ownership

Dun & Bradstreet unveiled a new Beneficial Ownership product to assist with client onboarding and back-book remediation of current customers.  The service helps determine who are the ultimate benefactors of each transaction.  Beneficial Ownership assists with legal compliance including Know Your Customer (KYC), Anti-Money Laundering, Politically Exposed Persons (PEP), and sanctions lists monitoring.  Overall, there are around a dozen relevant regulations concerning beneficial ownership with different thresholds for research.  By automating these checks, which have historically required manual research teams, Dun & Bradstreet is reducing time, expense, and risk (e.g. credit, supplier, reputational) while expediting the client onboarding process.

“Compliance teams are challenged to manage third-party due diligence, Anti-Money Laundering, Know Your Customer and tax compliance regulations through manual processes that can be costly and inefficient,” said Brian Alster, Dun & Bradstreet’s Global Head of Supply and Compliance. “By harnessing Dun & Bradstreet’s verified data with D&B Beneficial Ownership, the process can be easily automated to fast-track standard onboarding, helping companies relieve compliance burdens, and get back to driving growth.”

While family trees focus on controlling interest there are numerous legal reasons to look beyond controlling interest.  These include onboarding and ongoing compliance (e.g. KYC, AML, PEP, sanctions) as well as company research relevant to conflicts of interest, supply chain risk, and vetting customers, partners, service providers, and resellers.

The new offering, which draws from the D&B WorldBase file of 265 million active and inactive company records, spans 62 countries and 71 million shareholders.  D&B Beneficial Ownership is available through batch, real-time, and online access via the D&B Direct API or D&B Onboard.   The service also delivers ownership change alerts and a visualization layer which displays a spider-web view of branches and loops of business structures.  To assist with varying global requirements, users can query at different ownership thresholds.  Both corporate and individual beneficial owners are assessed across 100 million plus connections.

With D&B Direct 2.0, API clients pass the company name which is DUNS Matched.  The API then returns a detailed list of shareholders to the desired threshold including percent of ownership and loops (i.e. cross-ownerships).

Visualization tools help contextualize shareholding and ownership relationships.
Visualization tools help contextualize shareholding and ownership relationships.

Dun & Bradstreet collects shareholdings data from registered filings (mostly in Europe), direct research teams, and licensed data.  Ownership data goes down to 0.1% ownership levels.  Other compliance data includes PEP flags,  sanctions lists (e.g. OFAC), and adverse media searches.

Beneficial Ownership intelligence is also important for companies with deep supply chains looking to prevent reputational risk and ensure a minimal level of ethical behavior amongst their subcontractors.  Last May, Dun & Bradstreet launched a Human Trafficking Risk Index tool which helps firms avoid dodgy suppliers that may be using slave labor.   The Human Trafficking Risk Index is the first in a series of “Responsible Business Analytics” products in their pipeline.

Bureau van Dijk Integrates RepRisk Reports

RepRisk Issues span 28 topics
RepRisk coverage spans 28 issues and 45 topics across 70,000 global firms.

Bureau van Dijk partnered with RepRisk to integrate RepRisk’s environmental, social, and governance (ESG) risk reports into their global ORBIS database.  Content includes ESG risk metrics and analytics from the RepRisk ESG Risk Platform.  RepRisk claims to provide “the world’s most comprehensive database on ESG risks.”

The RepRisk Index combines company and country risk intelligence alongside Bureau van Dijk’s corporate ownership data.  RepRisk  screens 80,000 third-party sources spanning fifteen languages.  Company, country, and industry risk data is updated daily.  The company tracks 28 specific issues and 45 topics (e.g. fracking, indigenous peoples, illegal mining) across 70,000 companies.

Use cases include client onboarding, credit risk, compliance, and supply chain vetting.  Content will also be available via Bureau van Dijk’s Catalyst workflow solutions.

“In today’s business climate, there is a growing demand for information on environmental, social and governance reputational risk,” said Louise Green, Bureau van Dijk’s global marketing director. “RepRisk is an industry leader in the field of dynamic ESG risk analytics and metrics whose data complements our own extensive combination of financial, compliance, sanctions and risk-related information and gives our users the ability to make better-informed business decisions with a greater degree of certainty.”

“Our research focuses on capturing and analyzing data from media, stakeholders, and other public sources external to the company. This insight helps balance and substantiate the information provided by the company itself, and helps assess whether a company’s intention – policies, processes, and commitments – translates into practice,” says the RepRisk website.  “We believe that corporate responsibility goes hand-in-hand with sound financial and reputational risk management, operational excellence, and profitable growth in the medium and long term.”

Earlier this year, Bureau van Dijk rolled out an improved user interface for ORBIS.

Dun & Bradstreet Human Trafficking Risk Index

HTRI

This is a bit off the beaten path for my usual discussions, but it is always welcome when a company is able to create new products which take their core capabilities and direct them towards a global (or local) problem.  In this case, Dun & Bradstreet has developed a Human Trafficking Risk Index which helps firms avoid dodgy suppliers that may be using slave labor.   What’s more, this appears to be the first in a series of “Responsible Business Analytics” products they are planning to launch.

Their new Human Trafficking Risk Index helps procurement departments identify potential vendors that utilize trafficked labor (21 million people globally).  This shadow economy has been sized at $150 billion in annual illegal profits by the International Labor Organization.  Dun & Bradstreet is combining data from the US Departments of State and Labor with their global linkage information to help their customers “address supply chain risk while also helping them to be responsible corporate citizens.”

In “Trafficking in Persons Report” (July 2015), Secretary of State John Kerry said “This year’s Report places a special emphasis on human trafficking in the global marketplace. It highlights the hidden risks that workers may encounter when seeking employment and the steps that governments and businesses can take to prevent trafficking, including a demand for transparency in global supply chains.

When people are asked about Dun & Bradstreet, they usually think of business credit reports, but the credit products are part of a broader Risk Management Solutions division that covers both business credit and supplier risk.  Along with credit scores, they have one of the world’s leading company databases, the 250 million company WorldBase file, which covers both active and inactive companies with deep company linkage.  It is this linkage intelligence that helps firms see through shells and holding companies to connect known bad actors with the rest of the organization.

Companies are already looking for the risk management companies to assist with KYC (Know Your Client), AML (anti-money laundering), and PEP (Politically Exposed Persons) to root out corruption.  Responsible Business Analytics is simply the next set of tools for helping companies act responsibly, maintain compliance, and avoid reputational black eyes.

What was impressed me was that on their Q1 earnings call, CEO Bob Carrigan spent a few minutes of his prepared remarks discussing their new index.  His focus wasn’t on profitability or future revenue streams, but about helping to reduce a global problem.  Carrigan argued that the role of the Chief Procurement Officer has expanded from optimizing the supplier base to managing supply risk including reputational risk.  Thus, the CPO needs tools that assist with regulatory compliance and brand risk management.  According to Carrigan,

Our supply risk solutions help customers manage this full spectrum of risks.  Today, CPOs have a fast growing need in what we call “Responsible Business Analytics” to help them guard against regulatory and reputational risks.  We help them as they comply with Government diversity requirements and monitor global banned entity lists, as well as meeting their social responsibility commitments like funding suppliers with sustainable business practices and meeting best in class ethics standards.

Is this a product category that will be a big money maker for Dun & Bradstreet?  I doubt it.  But at the margins, it provides a differentiator between Dun & Bradstreet and other supply risk vendors.  As such, it could tip a few deals their way while helping to reduce the profits of human traffickers.