Don’t Not Expect Vital Information from Around the World
Providing vital information to manage risks and react to unforeseen events
“Providing vital information to manage risks and react to unforeseen events”—I came up with this motto when I opened my research shop a long time ago. And a long time ago, nearly all the people and companies the vital information was about were in the United States. Looking up a company in Russia or China or Australia did not happen often. When it did, it was a production, an event, and especially, a large bill. The cost of international research stopped a lot of projects, but there were other issues too; the information was limited, coming from undefined, indeterminate sources. It took time. Getting vital information on companies and individuals outside the US remains challenging. Yet, these days, we can better and more easily, address international research needs. We can do a lot without leaving our offices.
If you’ve had kids, been near kids or heard of the idea that kids exist, your ear worm will go there when it’s brought up. It’s a small, small, (smaller) world (after all), these days. Companies are much more likely to do business, use vendors, and take investments from people around the globe. The Internet and cheap long distance calls made a huge difference in the ability to turn to someone far away. Obviously, there are a host of other economic and business needs that cause businesses to look abroad. US businesses though, have a heightened need to check their international partners. Consequences from the Foreign Corrupt Practices Act, the Patriot Act and other laws and regulations demand due diligence. You cannot turn a blind eye to your partner in Nepal, or ignore who is included on the litany of sanctions lists. Check them out. Research can be done.
Research language, the language you search in and the language of your finds, remain a problem. Public records in Mexico are going to be in ‘Mexican’, i.e., Spanish. What kind of public records are there? That’s the second problem. It’s a problem-problem. What public records exist where you’re looking, and do you have access to those records? In other words, can you get it through your Lexis subscription? We can take on these problems better now through the magic of the aforementioned Internet. Plus, Google Translate.
As in any background research project, the scope of an international search can be great or modest. Adequate research should reflect potential reputational risks, economic impact, and regulatory/legal responsibilities. The needs should be considered against timing and budget concerns. There is never a right answer or approach to any research project. Regardless of the open-source tools available, there will be more roadblocks with international research, and these roadblocks impact the scope that can realistically be achieved.
The scope of international research typically revolves around three research objectives:
1. The legitimacy or “realness” of the enterprise/company in question—this is especially paramount because often you are doing business with people you never meet in person; you cannot stop by for happy hour
2. The existence of adverse or negative information, such as articles, litigation, or enforcement actions
3. A review of watchlists and “PEP” (politically exposed persons) lists
Like I say, the good news is we can do a lot across these areas from our computers.
Is the Company Real
There are two ways to look at this question and two ways to go about answering it. As in, has the company registered, incorporated, or otherwise made itself a legal entity? Also, is it more than a name, a shell? In the United States, we would mostly look at filings made with the Secretary of State in each state; records of corporations or officers and directors or limited liability partners that are available for any state that does not rhyme with ‘shmelaware.’ .
Around the world, exists the equivalent, a public place for filing of businesses. Yes, there is nuance and there are tricks. For instance, in Canada, you can register your company “federally” or “provincially” (for reasons I have no idea). You must look in the right space. You can, as I emphasis today, look from the comfort of your computer no matter where you sit. Every country, every Companies House? No. Not every country puts their company records on the Internet and not every country has computerized their company records. You may not know until you search.
As to whether the company is real, or what if you cannot find a company registration.? We can turn to a variety of sources and methods. We can look the company up in databases. Kompass, Panjiva, and Dun & Bradstreet all collect information on companies from around the world and there is often a great deal of “public” or free information on these sites. We can also look to see what we’d call indicia or realness. Do they have a website? What’s at their address on Google Maps? LinkedIn profiles, etc., things that comport to a real company. In most cases, it’s less a question of going to one site and more a question of wandering around Google to see what you find.
Adverse Information
Good guy? That’s the raison d’etre of most checks. What can we, in the US, find out about someone outside the US to assess their reputation? We got the news. I blogged about this before. There are many news sources to look at via paid services like Nexis or just by bopping around “open-sources.” What’s really changed, I think, is the amount of litigation records one can now get. Personally, I check out a lot of companies in India. I can now find litigation records online for India. It’s convoluted and cumbersome, but there are all sorts of India litigation records one can now access from the US. The UK too, now has something called a CE File, which is akin to our PACER and allows for some remote litigation checks. Know that outside of the US, there are often big limitations on litigation records as to who you can look up and how far back the data goes. Many litigation records are not pubic. Still, there are records to find.
The Lists
As noted above, when looking at companies around the world, it is critical to address risks related to matters of corruption. A while back, a bunch of countries got together and formed the Financial Action Task Force (FATF) to deal with corruption and related issues. The FATF identified a special kind of corruption risk, called politically exposed persons or PEP. 2013, FATF wrote:
A politically exposed person (PEP) is an individual who is or has been entrusted with a prominent function. Many PEPs hold positions that can be abused for the purpose of laundering illicit funds or other predicate offences such as corruption or bribery.
It became incumbent when doing international research, to see if someone is/was a PEP.
In addition to PEP searching, the other imperative is to make sure a company or individual is not on any list maintained by the US Office of Foreign Asset Control (OFAC). OFAC maintains a “Specially Designated Nationals and Blocked Persons list ("SDN List") and other sanctions lists. These lists cover:
Economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States.
You can try to get at these lists directly. You can go to a government database. OFAC can be searched here. For PEPs, you can try to figure out a source for where you are looking. For instance, you can look here for Members of Parliament. The CIA has a public database of World Leaders. You may like the assurance that you are going straight to the source. There are a few drawbacks, however, to doing it this way. First, it’s lot harder and takes longer to search this way. Second, and more importantly, you may not realize all the places to look. The alternative then is to use various databases or services that cover these records. There are both free sites that you can try and paid services, probably the most used, WorldCheck by Refinitiv. A long standing research truism, you get what you pay for. Plus, sources like WorldCheck can also inform on adverse information.
With access to things like WorldCheck as well as all the things available “open-source”, the reach for vital information now stretches far. It truly is a small world after all. There is no place where at least something can’t be done, and these days, most places where it can be done. It can be done from our desks.