Sanctions, financial losses, reputational damage to your company: compliance is no longer just a regulatory formality, it’s a concrete business risk that needs to be closely monitored. Strategies, early warning signals, common mistakes: our experts share their solutions to strengthen your day-to-day monitoring of your clients and suppliers, make your decisions more reliable and secure your business.
Trade risks: when compliance is no longer just a simple ‘check’
Today, compliance screening is no longer limited to a simple checklist of boxes to tick during the onboarding process for new clients or suppliers. In today’s global marketplace and in the face of tightening international regulations, compliance is now intrinsically linked to trade risk. In the face of this strategic reputational risk, compliance acts as a genuine shield, protecting your business from:
- regulatory sanctions;
- reputational damage;
- costly errors.
In the event of non-compliance with regulatory obligations, companies face direct financial losses (penalties, blocked payments, contract terminations), but also risk having to absorb a more long-term cost: reputational damage, which undermines the trust of customers, banks… and partners. The geopolitical context and constantly evolving regulations make this risk more pressing on a day-to-day basis, including for companies that operate primarily in their domestic market.
The roles involved now extend far beyond compliance experts alone: procurement, credit management, risk management, onboarding of new customers or suppliers, treasury.
Any team that ‘approves’ a third party may, involuntarily, expose their company to risks that are invisible using traditional tools:
- hidden ownership;
- sanctioned entities (including implicit ones);
- signs of financial instability;
- exposure to insolvency.
Recent examples speak for themselves:
- In 2024, GBA Capital was fined over $250 million for failing to identify links to the Russian government when onboarding a client, amidst international sanctions.
- The British law firm Taylor Vinters was ordered in 2017 to pay a fine of £172,000 after failing to identify that its client’s beneficial owner was a politically exposed person (PEP) in another country, and for failing to conduct in-depth checks, including verifying the source of the funds.
Beyond the financial penalties, these cases have seriously damaged the reputation of these organisations among their clients and partners.
Compliance goes beyond the financial health of your partners. It has become a critical day-to-day issue that exposes companies to penalties and can jeopardise their reputation. Certain key pieces of information, such as ownership and the transparency of corporate structures, are complex to identify and can sometimes be rather opaque.
The geopolitical landscape is constantly evolving, and it is becoming extremely difficult to keep pace with these changes without the right screening and assessment tools to be supported through the process.
Hence the strategic importance for companies to ensure they conduct due diligence and equip themselves with comprehensive, high-performance solutions to effectively protect their operations
Felipe Henao Brand, Go-to-Market Director at Coface Business Information.
Weak signals, hidden risks: 6 levers to scale up your monitoring
At a time when sanctions are changing daily and ownership structures are becoming increasingly opaque, strengthening your clients and suppliers’ due diligence processes (KYC, KYB, KYS) is no longer a luxury: it is a strategic necessity. The aim is no longer simply to “filter”, but to detect issues earlier, document them more effectively, and make decisions with greater confidence.
Most of the time, compliance teams focus their efforts on standard sanctions lists or carry out time-consuming manual checks that are prone to errors. However, in the reality of B2B operations, compliance risks never manifest themselves in a dramatic way. They are often hidden in the details and initially appear as weak signals:
- a forgotten subsidiary;
- a beneficial owner who is difficult to identify;
- indirect links to politically exposed persons;
- exposure to sanctioned entities via complex minority shareholdings…
Without a comprehensive and up-to-date overview, these warning signs go unnoticed until it is too late. This is precisely why your screening must be structured, exhaustive, well-equipped… and become a daily routine in your operations.
1 - Expand the scope of your checks
Relying on a single official sanctions list is no longer enough: beyond the scope and timeliness of updates, the real pitfall lies in implicit sanctions. A partner or entity may be sanctioned by virtue of ownership, without ever appearing on a list, simply because it is owned by a sanctioned person or entity (e.g. the OFAC 50% rule and equivalents). It is precisely this type of alert that manual compliance checks most often miss.
Official lists (OFAC, EU, UN, etc.) are essential, but they only cover part of the risk. That is why it is vital to cover both:
- explicit sanctions (OFAC, EU, UN, etc.)
- implicit sanctions, linked to beneficial ownership (UBO) and extension rules (such as the 50% rule).
Implicit or Narrative sanctions apply when entities are not listed by name but become subject to sanctions via their ownership structure. There is no official list for these companies: our teams identify them and their owners and controllers through in-depth research
Alexander Tame – Senior Channel Partner Manager – LSEG Group.
These risks are often invisible without specialised tools and put your business at risk without you even realising it. You should therefore use a solution capable of analysing the entire ownership chain, including UBOs (Ultimate Beneficial Owners), and featuring an implicit sanctions module.
2 – Structuring your data: avoid ‘false positives’ and don’t let your guard down
Effective screening depends on reliable, structured data. To reduce the risk of ‘false positives’ without missing the key details, opt for enriched databases that include secondary identifiers such as:
- dates and places of birth
- official identification numbers
- aliases
- addresses
- exact job titles
This allows you to accurately identify the third parties you are screening, whilst making the process smoother, faster and more reliable.
3 – Adverse media: integrate reputation into your assessment
Monitoring international sanctions and politically exposed persons (PEPs) is not enough: a partner may pose a major reputational risk without having been formally sanctioned — for example, if they are the subject of an ongoing investigation into corruption, money laundering, fraud or criminal activity.
Always enable the adverse media module in your checks and prioritise providers that exclude unreliable sources (social media, unverified blogs, etc.). Information from adverse media complements your risk assessment, particularly when financial indicators are insufficient.
This cross-analysis enables you to identify sensitive situations – investigations, serious allegations, criminal links – before they become threats to your business.
4 – Map the ENTIRE relational ecosystem
Effectively assessing a company involves more than just analysing its profile; it requires a deep understanding of:
- which stakeholders it is linked to,
- who owns it
- with whom it interacts in the course of its operations.
Example: a company discovered, months later, a direct link between its partner and an entity heavily exposed to international sanctions. And for good reason: the original entity did not raise any visible red flags at first glance!
You should therefore use a tool offering a comprehensive and up-to-date mapping of relationship risk, enabling you to uncover in a matter of seconds what a manual search would take hours to piece together.
5 – Document all decisions, implement continuous monitoring
A business partner that is not considered a risk today may well become one tomorrow. That is why it is vital to document your decisions systematically and to establish continuous monitoring of your business stakeholders. Assess your customers or suppliers according to their risk level and, for example, put in place a three-tier process:
- Initial checks for all your business partners
- Enhanced due diligence based on amounts, risk levels or sensitive countries
- Priority monitoring for critical third-party partners
Finally, place high-risk third parties under continuous monitoring so that any new alerts are automatically detected.
6 - Finance + compliance = full traceability
Compliance does not replace financial risk analysis: it complements it. To make quick decisions without acting blindly, you need a common language across teams.
In most companies, procurement, risk, credit and compliance teams generally work in silos. That is why it is better to organise your processes around a single tool, rather than using multiple platforms and dashboards, which effectively create blind spots in your monitoring.
By linking your tools, you centralise verification, ensuring full traceability, which also facilitates internal decision-making. The ability to visualise a third party’s relationship networks, record your decisions and implement continuous monitoring from a single platform ensures a robust, unified process across the entire organisation, faster decision-making, and a single view for all your internal teams: procurement, finance, risk and compliance.
It is precisely to address these challenges that Coface has partnered with LSEG (London Stock Exchange Group), globally recognised for its World-Check One solution. This partnership combines Coface’s expertise in commercial risk management (credit, financial) with LSEG’s structured compliance data, updated in real time. In practical terms, Urba360 users can now directly access compliance screening information, including politically exposed persons (PEPs), international sanctions, regulatory actions and adverse media coverage, all from a single point of access.
The Urba360 Score provided by Coface gives an indication of financial stability and the probability of default over 12 months, on a scale of 0 to 10 — a useful benchmark for prioritising your checks and calibrating your limits.
What lies “behind” this score is just as important:
- financial data,
- payment behaviour,
- sector and economic analyses…
- …enriched by Coface’s global and historical expertise.
The result: you combine default risk (scores, credit reports, etc.) and compliance/reputation risk (sanctions, PEPs, negative media coverage, beneficial owners) within a single decision-making process.
Combining financial risk analysis with compliance screening gives you a suite of very powerful tools to make better decisions and streamline your processes
Felipe Henao Brand, Go-to-Market Director at Coface Business Information.
LEARN MORE
- Watch our full webinar : Identify compliance risks before they cost you dearly(45 minutes with live demonstration)
- Contact us and request your personalised demo to find out more about integrating compliance screening into our Urba 360 platform.
