The FT’s breaking news story yesterday – “Iran ran sanctions-evading network with Lloyds and Santander accounts” – highlights the challenges associated with identifying ultimate beneficial owners, even for large institutions says our Head of MLRO, Louis Dodd.
In what is described as “part of a vast sanctions evasion scheme backed by Tehran’s intelligence service”, London Petrochemical Commercial Company used a “complex web of front entities” in the UK and other countries to move funds around the globe, deploying “trustee agreements and nominee directors” to conceal its underlying owners.
Understanding complex ownership structures to correctly identify the underlying beneficial owners to tackle financial crime is high on the radars of regulators around the globe. This case demonstrates the complexity of the task and the importance of a strong compliance culture and robust KYC processes. It is relevant for all financial institutions, including private market firms.
Best practices include:
- Establishing a clear and complete picture of the overall ownership structure;
- Enhanced due diligence on trustees and nominees, verifying their identities and legitimacy;
- Regularly reviewing and updating KYC procedures to address evolving tactics used to hide ownership; and
- Leveraging technology to improve risk identification and detection of suspicious activity.
How we can help?
IDR provides investor KYC services to more than 300 private markets fund managers around the globe. Our KYC team are experts in untangling complex ownership structures and identifying underlying owners and controllers. We support investors to complete their profile once, inclusive of UBO structure, then gather and verify all relevant documentation to approve them to globally compliant standards. Each of the +40,000 investor profiles on our trusted private markets hub are screened every 24 hours against sanctions and enforcement lists and kept up to date in line with their associated risk profile, ensuring compliance on an ongoing basis.
For more information on our one-and-done solution click here.
