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How OpenSanctions, Open Ownership and GLEIF Are Collaborating to Enhance Sanctions and Anti-Money Laundering Screening

Money laundering poses an inordinate threat; the Bank for International Settlements (BIS) estimates that between $2-$5 trillion is laundered globally each year with less than 1% recovered. Friedrich Lindenberg, Founder, OpenSanctions, explains why OpenSanctions partnered with GLEIF and Open Ownership in the global fight against financial crime by enabling critical data sets to be efficiently matched, particularly in the context of cross-border and instant payments.

Author: Friedrich Lindenberg, Founder, OpenSanctions

  • Date: 2023-12-06
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The collaboration between GLEIF and Open Ownership showcased with the intention to further extend the mapping to the OpenSanctions database, was recognized in the shortlist for the G20 TechSprint 2023. What value does this collaboration provide in the fight against financial crime?

There is clearly a lot of use for a product like this in the financial regulation world, as we saw at the TechSprint. The collaboration highlights the effectiveness of well-structured open data and robust corporate identifiers. It also underscores the practical application of data integration as a pivotal tool in combating financial crime.

The integration offers a comprehensive network of entities and relationships, streamlining the process for analysts to explore leads and evaluate potential risks to a company. This project also underscores the practical application of data integration as a pivotal tool in combating financial crime.

What is particularly interesting about this as a collaborative project is that it brings together multiple speciality datasets so we can identify what are called secondary sanctions. These apply specifically to companies in which 50% or more of the company is owned by sanctioned individuals or entities, and helps us work towards a comprehensive dataset for screening and asset tracing.

The joint initiative has the potential to improve screening processes and enhance support for anti-money laundering (AML), counter-terrorist financing (CTF), customer due diligence, and sanctions enforcement efforts globally. What are the most critical issues facing the global financial system today?

The global financial system faces multiple challenges at the moment. While many companies conducting sanctions screening encounter annoying and possibly frequent issues like false positives because of a poor-quality dataset, a more significant concern is the overall effectiveness of these screening systems.

These types of questions are rarely asked within regulated entities, and most systems are not designed in ways to sufficiently answer these questions. We can make minor fixes here and there, but the most significant problems stem from these larger-scale questions and issues.

The data shared between entities must be standardized for the benefits of sanctions and anti-money laundering screening. How does the joint initiative help to solve this challenge?

It facilitates this by employing common identifiers such as the LEI code and utilizing the mapping from LEI to other identifiers like ISIN and BIC. The initiative also leverages emerging standards like BODS for beneficial ownership data, enabling the integration of data and the creation of reusable analysis tools. These strategies contribute to standardizing shared data among entities, enhancing the efficacy of sanctions and anti-money laundering screening processes.

"It takes a network to defeat a network", said Beju Shah, Head of the BIS Innovation Hub Nordic Centre, when Project Aurora was concluded. Can you explain how your network of organizations (called ‘Transparency Fabric’) collaborating with open, high-quality, standardized data can support the fight against malicious networks?

One of the things that makes the Transparency Fabric particularly useful is that each of the organizations involved brings its own specialty. Together, the Transparency Fabric can fight financial crime by enabling critical data sets to be efficiently matched, particularly in cross-border and instant payments.

One of the biggest issues during AML and CFT checks is the lack of high-quality, globally beneficial ownership data. As governments decide to opt for transparency over secrecy, OpenSanctions and Open Ownership can help provide a more in-depth look at the networks surrounding sanctioned entities and persons.

How will the joint initiative progress?

There are a few directions we are looking to grow into. First, we are always looking to add more beneficial ownership data. There are a few more stones to be turned in this category, for example, data released by national governments using the BODS standard.

Additionally, the mappings that GLEIF has been providing between its own identifiers and other systems – like ISINs, BICs and OpenCorporates IDs – have proven invaluable. It would be useful to have more mappings between other identifiers used in the financial sector. This goes back to the idea of properly designing our systems for the goals at hand. If we improve the mapping of identifiers such as stock symbols and securities codes, we could strengthen the means that regulated companies have in identifying risk and provide a more robust financial crime prevention tool.

What future plans does OpenSanctions have?

One of our main projects currently is mapping out PEP (Politically Exposed Persons) data. If you want to fight financial crime, you have to look past just sanctioned individuals and also consider everybody who has the means to use state funds.

Systematically collecting information about politically exposed persons around the world is particularly challenging because there are no globally defined rules considering who is or is not classified as a PEP, but the distinction is nonetheless important.

We recently revamped our entire PEP dataset and created specific country pages so users could better explore and utilize our data. Now, we are looking into what other data or qualifiers could be valuable for our users.

Beyond that, of course, we want to grow the amount of beneficial ownership data that we can access and associate to the risk information we collect. In particular, we are interested in jurisdictions that have become the focus of sanctions evasion, such as Turkey, Dubai, and Central Asia.

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About the author:

Friedrich Lindenberg is the founder of OpenSanctions. His interest in watchlist data is inspired by his work in investigative reporting. Friedrich led the data team at the Organized Crime and Corruption Reporting Project (OCCRP) from 2016 to 2021, where he contributed to numerous investigations into transnational crime, offshore finance, and money laundering.

He started the Aleph project, an open-source data platform used by reporters and analysts in over 40 media organisations to explore large structured and unstructured datasets and find reporting leads.

Tags for this article:
LEI Mapping, Open Data, Know-Your-Customer (KYC), LEI Business Case, Data Management, Global Legal Entity Identifier Foundation (GLEIF), Global LEI Index