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Use of Business Structures in ComplianceChristian Wagenlechner, Bisnode D-A-CH

Reduce Complexity

Data Management

"Good decisions made on bad data are just bad decisions you don't know about yet!“*

* Scott Taylor, metametaconsulting

With over 335 million business entities, Dun & Bradstreet compiles the largest B2B database in the world

Data from over 220 countries with 5 million updates daily

30,000 sources for identity, firmographic, and company

relationship data

The reference file for global Identity

Resolution processes The source of globallinkage data for all

global products

BisnodeBisnode D&B secures your relationship to your business partners throughout your value chain

Find newcustomers /

vendors

Onboarding ofnew Business

PartnersCompliance Screening

Duplicatedetection

Credit Policy design

Risk Evaluation for customersand vendors

CRM ERPMDM

• Target groupselection on theworlds largestbusiness database

• Web crawling• Lead Management

• Global Coverage• Consistent address

quality DUNSRight®-compliant data

• Classification data forinternal analytics andBusiness Partner grouping

• Alternative companynames

• Executives• D&B Corporate

Linkage

• D&B DUNS Number• Activity Status• D&B Corporate

Linkage• D&B Master Data

Monitoring service

• AutomatedCompliance Check

• D&B Corporate Linkage

• PEP• Sanctions list• Adverse Media

Screening

• D&B Rating®• D&B Score®• Details: Worldwide

Text Reports• Automation:

Structured Risk Data• D&B Monitoring

Services• D&B Decisioning

Engine

• D&B DunTrade® Payment ExperiencesPool

• Masterscaling ofincoming risk datafrom various sources

• Statistical Scorecardsfor Credit Policies on internal and externalData

• Alerting via Big Data analysis from Web Crawling

The ChallengesCentral Concerns of a Chief Compliance Officer (CCO)

Regulatory examinations orprevent fines

Support growth – withoutcompliance threads

Management of different information sources and data

accuracy

Manage lack of ressourcesand long processing times

Leading CCOs often focus Corporate Social Responsibility and the preventionof negative press in news and mediaas well as brand protection

Currect Compliance ProcessesSurvey Results

47% OF RESPONDENTS

believe that resources are a barrier to doing their job effectively

Source: Compliance And Procurement Sentiment Report, Dun & Bradstreet, 2018

Source: Shine a Light on Customer Due Diligence, Bisnode Dun & Bradstreet, 2015

The Challenges – Understanding beneficial ownershipThresholds: Devil in the detail

Who is obliged?

FinCEN final rule Companies trading with US customers 25% ownership threshold

5th EU AML Directive

(Sanctions)EU Financial institutions and traders

25% shares or voting rights in a corporate entity. If, after having exhausted all possible meansand provided no UBO is identified, the natural person(s) holding the position of senior managing official(s) is/are, in principle considered to be the UBO

5th EU AML Directive(PEP)

EU Financial institutions and traders a threshold as low as 1% or 0.01% is required

OFAC Companies trading with US customers 50% rule

FATCA US tax citizens / companies a 10% ownership threshold or below for Foreign Investment Vehicles

OECD Common Reporting Standards

Companies within 129 signing countries a 10% ownership threshold

DODD-FRANK US stock listed companies Beneficial owner of more than 5% of certain equity securities are to disclose information relating to such beneficial ownership

SEC 506(E) Disclosure US stock listed companies Issuers must perform due diligence on any person that is going to become a 20% beneficialowner upon completion of a sale of securities

Compliance Violations are expensive…and may lead to personal cosequences for the acting Management

BNP ParibasBusiness with countries on US-Sanction Lists (e.g. Cuba, Iran, Myanmar, Sudan)Use of complex ownershipstructures in order to misleadtax authorities

Deutsche BankMoney laundering cases in New York, London and Moscow between 2011 and 2015Violation of US economicsanctions

Linde GroupFirst FCPA case unter theTrump Administration

2017 FCPA-Breches corruptpayments to executives in state-owned entities in Georgia durch of two US-subsidiariesof Linde Group

BilfingerBribery and corruption during a pipeline project in Nigeria

Fines:• 8,9 Bn. USD to authorities• One year no business

based on USD• Dismissial of 13 top

managers

Fines:• 588 Mn. EUR to UK- and

US-Authorities• 37 Mn. EUR to the US-

National Bank• 258 Mn $ for US

settlements• Charges against

Management• Ongoing investigation

Fines:• 11,2 Mn. USD to US-

authorities

Fines:• 32 Mn. USD to authorities• Recent investigations in

other cases• Permanent monitoring of

compliance-systems and -processes

We enable a seamless due diligenceLet’s design the optimal workflow for you and your organization

Identify

• Identify the specific customer that is being enquired upon

Verify

• Verify a set of data against that business based on a risk based approach

Enrich

• Establish ownership of business and determine Ultimate Beneficial Owners

Screen

• Screen entities against sanction lists

Monitor

• Monitor for changes to ensure continued compliance

Audit

• Demonstrate adherence to policy for each case

Bisnode D&B have created a suite of Global API’s via the D&B Direct platform.Our data drives consistency for you.

Hiding Ownership Structures

Identify partner properly

• Challenge: Do you really know how many partners have to be checked? What about duplicates?

Make an assessment on the overall compliance risk to allocate resources

• Are the data at hand already in good shape for a first impression of the distribution of risk?

Define compliance process matching legal requirements and your business set up

• What processes are realistic to set up in your company and what data do you really need for these processes?

Our experienceCustomers discover master data on a side quest

Customers often start here and have to step

back

This is also a legal requirement and

should be the starting point

Global D&B Linkages: Example Thomas CookD&B Family Trees (2)

UK: 1335 companies

Ireland: 7 companies

France: 200

companies

Spain: 40 companies

Germany: 39 companies

Belgium: 26companies

Netherlands: 8 companies

Global Beneficial OwnerWhat is a „Global Beneficial Owner“?

• Beneficial Owner: The natural person(s) who ultimately own(s) or control(s) a company, and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.

• D&B UBO-Data:• GBO: Automatically find the GBO throughout the

ownership structure of a given company• IBO: Find all intermediary beneficial owners along the

companies‘ ownership structure• Identify the automatically calculated control

percentage of each Beneficial Owner from theviewpoint of the given company

Example: What data are needed for CDD?CDD – Customer Due Dilligence

[…]Sanctions

PEPs

Share-holder 3

Name Person

Identification of Person

Involvement in other companies

…

Business Partner

Name of company

Alternative names and brand names

Executive names

Ownership information

Share-holder 1

Name of company

Alternative names and brand names

Executive names

Ownership information

Share-holder 2

Name of company

Alternative names and brand names

Executive names

Ownership information

„Names toscreen“

List of relatedcompanies and individuals to be

checked

- Company Names

- Trade Styles- Executives- …

Black Lists

[…]

The sancti-oned party may be hidden

deep in a corporateownership structure

“D&B Master Data”

“UBO”“UBO”“D&B UBO”

“Bisnode Screening Services”

The Solutions – Understanding beneficial ownershipWhat Bisnode D&B products support which directive?

Who is obliged?D&B Master Data

D&B UBO

D&B Family Tree

Bisnode Smart Screening

FinCEN final rule Companies trading with US customers Opt. Yes Opt. Yes 25% ownership threshold

5th EU AML Directive

(Sanctions)EU Financial institutions and traders Yes Yes Opt. Yes

25% shares or voting rights in a corporate entity. If, after havingexhausted all possible means and provided no UBO is identified, the natural person(s) holding the position of senior managing official(s) is/are, in principle considered to be the UBO

5th EU AML Directive(PEP)

EU Financial institutions and traders Yes Yes Opt. Yes a threshold as low as 1% or 0.01% is required

OFAC Companies trading with US customers Yes Yes Yes Yes 50% rule

FATCA US tax citizens / companies Yes Yes Opt. Yes a 10% ownership threshold or below for Foreign Investment Vehicles

OECD Common Reporting Standards

Companies within 129 signing countries Opt. Yes Opt. Yes a 10% ownership threshold

DODD-FRANK US stock listed companies Opt. Yes Opt. Yes Beneficial owner of more than 5% of certain equity securities are to

disclose information relating to such beneficial ownership

SEC 506(E) Disclosure

US stock listed companies Opt. Yes Opt. Yes. Issuers must perform due diligence on any person that is going to

become a 20% beneficial owner upon completion of a sale of securities

Example: Family Tree in CAM

TheGolden Record

Ultimate Beneficial

Owner DataScreening Services

Master Data for

Compliance

Put the pieces togetherWith global Bisnode D&B Data

Thank you!

Christian WagenlechnerDirector Risk & Compliance Consulting D-A-CH

Bisnode Deutschland GmbHchristian.wagenlechner@bisnode.com

www.bisnode.com

Corinna DereProduct Manager ComplianceBisnode Deutschland GmbHcorinna.dere@bisnode.comwww.bisnode.com