Proactive compliance: The benefits of continuous monitoring

August 29, 2024

Ebooks , Education

The Asia-Pacific is an engine of growth in the global economy. As businesses expand and explore new opportunities, these developments can create risks. From a compliance perspective, organisations need to continuously monitor for new red flags that could jeopardise their commercial relationships.

The role of continuous KYB and UBO monitoring

Ongoing Know Your Business (KYB) and Ultimate Beneficial Ownership (UBO) monitoring is increasingly regarded as an essential element in the fight against money laundering, terrorism financing and tax evasion. The scale of these challenges illustrates the urgency and necessity of effective KYB and UBO practices. For example, it is estimated that 2% to 5% of global GDP is laundered annually^[1].

Numerous case studies have shown how seemingly legitimate corporate vehicles, including corporations, trusts and foundations, can be used to improperly hide and transfer the proceeds of crime and conceal the identities of those who are involved in large-scale corruption. In response to these revelations, international efforts to thwart the misuse of corporate entities in committing financial crimes have significantly intensified, making effective KYB and UBO monitoring more essential than ever.

Why continuous monitoring matters

In APAC, businesses are dynamic, making it insufficient to rely on a one-time KYC, KYB or UBO check. A 2024 study by the Boston Consulting Group^[2] highlights the rapid pace of change in the region’s business landscape:

Nearly one-third (32%) of annual revenues from APAC companies surveyed are reinvested into launching, acquiring or co-launching startup ventures—a figure notably higher than the 27% global average.
Almost two-thirds (65%) of APAC leaders reported an increased focus on mergers and acquisitions compared to the previous year.

As companies restructure, relocate or experience significant shifts in ownership, these developments can impact their AML/CFT risk level and compliance status. Continuous monitoring ensures that the risk profile established during the initial onboarding stage remains accurate and up-to-date.

Continuous monitoring checklist

To maintain compliance and remain in good standing with regulators, here is an essential checklist of the information that organisations should consistently monitor as part of their KYB and UBO continuous monitoring programme:

Business information:

Name and registration number: Verify the current legal name and any registration details, and monitor for changes.
Date of incorporation: Keep a record of the incorporation date to track the business’s age and potential stability.
Registered capital: Monitor any changes in registered capital as it may indicate significant shifts in financial status.
Former names and changes: Track any historical changes in the business name to uncover potential discrepancies or issues.
Business contact and address: Regularly update the contact details and physical location of the business.
Status and legal forms: Ensure that the business maintains its legal status and conforms to the appropriate legal structures.
Activities and business scope: Monitor any changes in business activities or scope to assess new risks or compliance requirements.

Key personnel and ownership:

Officers, directors and shareholders: Keep current records of all key figures in the company, noting any changes in these positions.
Share proportion: Track any changes in share distribution among key stakeholders.
Registered capital: Ensure the accuracy of recorded capital and any updates or changes made post-initial filing.

UBOs:

Equity chain: Monitor the complete equity chain to understand ownership structure thoroughly.
UBO name: Maintain accurate records of the UBO’s identity.
Ultimate beneficial share proportion: Track any changes in the UBO’s shareholding percentage.
Corporate structure and ownerships: Regularly review the corporate structure and ownership details for any alterations.

Watchlists:

Administrative penalties: Stay informed of any penalties or administrative actions taken against the company.
Court records: Monitor any new or ongoing legal proceedings involving the company.
Equity pledged: Keep track of any pledged company equity, which may indicate financial distress or other risks.
Irregularities: Be alert to any operational or financial irregularities reported or observed.
Law enforcement: Note any involvement of company personnel or operations with law enforcement agencies.
Bankruptcy reorganisation: Stay updated on any bankruptcy filings or reorganisation plans, which significantly impact business stability and compliance status.

Managing compliance overload with technology

With the vast amount of data that needs to be monitored, manually handling continuous KYB and UBO monitoring can quickly become overwhelming for compliance teams. Leveraging advanced technologies such as automation and AI can streamline this process, handling monitoring tasks in the background and promptly flagging any changes in business data or ownership structures.

However, the effectiveness of these technologies hinges critically on the timeliness and accuracy of the data they access. Real-time data is essential, as it allows these systems to provide the most current insights. This capability enables compliance teams to concentrate on their core responsibilities, secure in the knowledge that they are acting on the most up-to-date information.

The value of understanding local data landscapes

A thorough understanding of the data landscapes across various APAC jurisdictions ensures organisations source data from the correct government registries and official repositories. With the ability to access this information in real-time, organisations can quickly close the data quality gaps and blind spots that create risk.

This method of live data retrieval directly from the source ensures that the organisation’s KYB and UBO intelligence is always current, elevating the reliability of the monitoring process.

How AsiaVerify automates continuous monitoring in APAC

AsiaVerify offers a best-in-class business verification platform providing access to 344 million entities and 2.9 billion individuals across 13 APAC jurisdictions. The technology behind AsiaVerify streamlines a range of compliance processes for clients, including KYB, UBO, KYC and continuous monitoring.

AsiaVerify’s fully-automated KYB and UBO monitoring technology has algorithms that are uniquely tuned to detect important changes to a business profile and to trigger immediate notifications to the clients whenever they occur.

Clients benefit from real-time access to accurate information for enhanced decision-making and compliance, mitigating risk and unlocking growth opportunities across the APAC market.