Avoid the risk of financial crimes and compliance threats

For months, there has been strong focus on the so-called Panama Papers and on the pending results of the national investigations faced by several implicated individuals. As more details emerge, there is one clear and significant take-out from this scandal – that white collar crimes are alive and well.


The Panama Papers showcase the array of ways in which the rich, the world over were able to exploit offshore tax regimes.  Among those cited are world leaders, celebrities, sport stars and in some cases, family members of these individuals.


“While due diligence and compliance officers have had success in identifying threats to their business, the sheer scale of the Panama Papers leak proves that suspicious financial activities can easily slip under the radar,” said Rudi Kruger, General Manager of LexisNexis Governance, Risk & Compliance.


The South African Revenue Service (SARS) recently identified the names of 1,700 individual South African residents released in the data, ranging from shareholders and directors to beneficiaries. So far 79 of a total 560 offshore entities have been matched to 81 South African residents.


These findings indicate a need across the globe to become more cautious against the risks of non-compliance and associating with suspicious financial activity.


Although the act of money laundering itself is a victimless white-collar crime it is often connected to serious and sometimes violent crime. Being able to stop money laundering is in effect, being able to stop the cash flows of international organized crime,” said Kruger.


In 2014 international monitoring organisation Global Financial Integrity (GFI) released a report on illegal capital flight, which suggested that South Africa loses an estimated R147-billion a year through the illegal movement of money out of the country. South Africa was one of 151 countries featured in the report and ranked 12th overall. The report also indicated that Sub-Saharan Africa had the biggest amount of illegal financial outflows. In addition, eight African countries are now listed on the Office of Foreign Assets Control (OFAC) and Financial Action Task Force on Money Laundering (FATF) watch lists which emphasises the importance of enhanced due diligence.

What to Do


Due diligence and compliance officers have the onerous task and legal obligation of effectively and efficiently rooting out corruption by meticulously understanding suppliers, partners, acquisition targets, contractors, resellers, grant applicants, and other associates. 


“It is important not just to understand the companies and individuals with whom the company interacts, but to do so as thoroughly as possible so that you are in the best position to comprehend the complex relationships and affiliations between companies and individuals or companies and other companies,” said Kruger.


Companies found guilty of failing to prevent bribery are at risk of unlimited fines, directors can be disqualified and individuals could be imprisoned for up to 10 years. To avoid these legal penalties, costs, and reputational damages of being associated with unethical or criminal associates, Kruger suggests the following guidelines:


1.     Thoroughly understand the companies and individuals with whom the company interacts and/or does business.

2.     Better comprehend the complex relationships and affiliations between companies and individuals or companies and other companies.

3.     Research and stay up to date on key developments with respect to key clients, suppliers, contractors, or partners.

4.     Research and vet potential investment opportunities, partnerships, acquisitions, or other strategic alliances.

5.     Ensure the ongoing financial health of key suppliers, clients, or other entities the business relies upon

6.     Avoid the legal penalties, costs, and reputational damages of being associated with unethical or criminal associates.

7.     Ensure you comply with local and international anti-bribery legislation.

8.     Conduct ongoing screening and monitoring, particularly around high risk third-parties to ensure you are alerted to any changes as soon as they happen.

9.     Seek information on your potential business associates’ legal history, including local and international cases to determine how litigious an individual or company may be.

10.  Understand that the onus to perform these procedures is on the institutions, not the criminals or the government.


Tailored solutions such as Lexis Diligence let you perform these steps with ease through simple fill-in-the-blank search fields. LexisDiligence is a highly advanced due diligence research solution that highlights the rule of law and provides rules and guidelines to ensure the legality of all client and company procedure.


Users can select a prospective third party, perform a company or person check, explore associated entity interests, check against sanctions, check for red flags and politically exposed persons data, search for negative news, check the litigation history, assess country risk and confirm as partner/ supplier/ distributor. LexisDiligence also enables compliance officers to review data from the UK, EU, US and selected Asian jurisdictions.


Lexis Diligence is a comprehensive database of more than 40 years of global archived news and data, designed to help a company perform the necessary due diligence in the areas of risk, compliance and fraud. This makes it a valuable tool for meeting anti-bribery, corruption and anti-money laundering requirements, such as those set out in the UK Bribery Act 2010.



For more information, visit: http://www.lexisnexis.co.za/our-solutions/private-sector/research-solutions/lexis-diligence-for-anti-bribery.aspx

Author: PR Officer

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