Intella - automated solution for third party checks

www.pwc.com
Intella - automated
solution for third party
checks
A quick way to learn more
about your business partners
28 January 2016
Question for voting
1
1.
How many third parties (suppliers, customers) does your
company have (on average annually)? / С каким
количеством контрагентов (поставщиков, клиентов)
работает Ваша компания (в среднем в год)?
100-500
51%
2. 500-1,000
3. 1,000-3,000
4. More than 3,000/Более 3,000
23%
5. Don’t know/Не знаю
10%
10%
5%
1.
PwC
2.
3.
4.
5.
Question for voting
2
How does your company conduct background checks on third
parties prior to contracting? / Каким образом в Вашей
компании проводится проверка благонадежности
контрагентов до заключения контракта?
1. Collect registration documents/Собираются
регистрационные документы
54%
2. Collect registration documents and conduct adverse
internet searches/Собираются документы и
проводится проверка на негатив в интернете
41%
3. Conduct enhanced due diligence/Проводится полная
проверка благонадежности
4. More than one of the above/Более одного из
вышеперечисленных
5%
5. No checks performed/Не проводится
6. Don’t know/Не знаю
PwC
0%
1.
2.
0%
3.
4.
5.
0%
6.
Question for voting
3
Does your company update results of initial checks on
third parties? / Обновляются ли в Вашей компании
результаты первоначальной проверки?
1. Yes, regularly (every month/quarter/year)/ Да,
регулярно (каждый месяц, квартал, год)
52%
2. In some cases/ В некоторых случаях
33%
3. No/Нет
4. Don’t know/Не знаю
9%
1.
PwC
2.
3.
6%
4.
Intella
Overview
CI automated tool is a solution aimed at
helping clients to quickly identify potential
risks (operational, tax, reputational,
financial and conflict of interest risks)
when dealing with a large amount
(hundreds, thousands) of third parties in
Russia.
It has two modules allowing run two streams
of analysis:
Risk assessment
Related party check
Intella - automated solution for third party checks
PwC
is the assessment of your
business partners towards
various risk criteria.
is a check which allows you to
identify links at various levels
of ownership and
relationship.
Main functions
Collects information on third parties from
different sources
Structures collected data into a table
for further analysis
Screens each business party against various
risk criteria
Identifies corporate links between business
parties and with employees
Visualises results and relevant links identified
January 2016
5
What for?
This is what you usually know about your third parties
Name
Having checked
your third parties
with Intella you
would know that
Intella - automated solution for third party checks
PwC
Turnover
Date of
contracting
Responsible
person
5 clients filed for
bankruptcy in the
last six months
You are the only
client for 6 of your
suppliers
15 suppliers have
features of shell
companies
10 suppliers
registered less than
four months before
the date of
contracting
12 clients came to
the attention of tax
authorities
10 of your business
partners may be
potentially affiliated
with your employees
January 2016
6
Intella
What for?
to identify and avoid
dealing with unreliable
third parties
to avoid potential
conflicts of interest by
checking whether your
employees are affiliated
with any of your third
parties
Intella - automated solution for third party checks
PwC
to reduce fraud risks
and losses
to monitor important
changes happening with
your business partners
which can impact your
business
January 2016
7
Intella
How it works
1
Obtain a list of INNs of your counterparties
2
Obtain a list of your employees
3
Upload both lists in the tool
4
Press the button to run the analysis
5
Obtain the results
6
Provide recommendation on further steps
Intella - automated solution for third party checks
PwC
January 2016
8
What are the sources of information used?
…to identify key principals and
registration data
We obtain the following
information from the corporate
databases: registration dates,
general directors, shareholders and
other key data.
Corporate
records
Tax Authorities
watch-lists
Types
of sources
of information
…for history of operations with
particular companies and names of
employees subject to affiliation checks
We retrieve data such as the initiation
of relationship, names of Client’s
employees and other information.
Intella - automated solution for third party checks
PwC
Client
information
Competition
body
watch-list
…for shell company indicators
The Russian Tax Authorities
maintain a number of watch-lists
which help to identify companies that
have features of bogus or shell
companies. Such lists include
disqualified directors, companies are
not reached at the legal address,
nominal directors/shareholders.
…for violations of competition
laws in public procurement
A list of unreliable suppliers
includes companies which have
violated tendering procedures
during public procurement,
including indicators of bid rigging.
January 2016
9
Small retail bank
Issue
What Intella Did
Result
• A small retail bank is controlled by two
groups of shareholders.
• Collected all the corporate data in
relation to 100 borrowers and around
10 suspicious companies.
• Client obtained evidence that some of
the borrowers were indeed connected
directly or indirectly with managers
and other shareholders. A number of
major construction and development
projects was financed through these
entities.
• Our Client - one group of shareholders
- had a suspicion that some of the
borrowers were affiliated with the
other group’s of shareholders and,
possibly, management.
• In addition, the Client identified some
suspicious companies in the bank’s
loan portfolio and sought to
understand whether they are
connected with the bank’s
management.
Intella - automated solution for third party checks
PwC
• Checked for affiliations between
borrowers/ suspicious companies and
 2, 000 of the bank’s employees
 senior management
 other group of shareholders.
• Client obtained a better understating
of the structure of its loan portfolio,
including shell companies, companies
affiliated with managers and other
suspicious companies, and was able to
decide on further actions, including
provision adjustments.
January 2016
10
Affiliation checks results
Нow the raw data looks
Intella - automated solution for third party checks
PwC
January 2016
11
Food company
Issue
What Intella Did
Result
• A Russian food company has a large
portfolio of suppliers (several
thousands).
• Collected the following corporate data
in relation to all the suppliers:
• Client identified which counterparties
represent risks.
1. Former directors and shareholders
• Evidence was found that some of
Client’s suppliers are owners of its
suppliers or associated with suppliers
through relatives.
• Basic checks on each counterparty are
conducted by its Security Department.
However, there is no clear
understanding of the structure and
content of its suppliers base.
• Client sought to identify whether there
are links between the whole population
of its suppliers and 50,000 of its
former and current employees.
• Client wanted to conduct an overall
risk assessment of all of its suppliers to
identify which of them require
immediate action.
Intella - automated solution for third party checks
PwC
2. Current directors and shareholders
• Checked for affiliations with
employees and their relatives.
• Screened all the counterparties against
various risk indicators.
• Client initiated a further review to
identify:
 What was the rationale behind
involving such suppliers?
 Are the terms with such suppliers
commercially advantageous or
otherwise?
 Are there any indicators of fraud?
January 2016
12
Affiliation checks
Links identified
Intella - automated solution for third party checks
PwC
January 2016
13
Risk assessment
Example of results
#
Tax number
Name
Annual
turnover
1
3135186957
ООО Business partner 1
5,932,619
2
4512843629
ООО Business partner 2
5,366,785
3
8541092226
ООО Business partner 3
4,779,861
4
5785092521
ООО Business partner 4
5,090,670
1
2
3
4
5
Business
partner is
dissolved
Business partner is
under administration
or bankruptcy
proceedings
Business partner
is undergoing
reorganisation
Business partner
did not submit
tax report for the
last year
Business partner has tax
arrears exceeding RUB
1,000 at the date of check
Breakdown of risk indicators
by number of business partners
Risk distribution
Immeditate risk
5%
Business partner's general director or
shareholder is nominal
2%
8%
Low risk
6%
1.1%
1.
High risk
Business partner is not accessible to the
Tax Authorities by its legal address
Business partner has tax arrears
exceeding RUB 1,000
% of Total number of
business partners
6%
6,0
10,0
% of Total turnover of
business partners
Medium risk
32,0
Business partner is undergoing
reorganisation
46,0
Business partner is under
administration/bankruptcy proceedings
Business partner is dissolved
PwC
5,0
Busienss partner did not submit tax report
for the last year
5%
Intella - automated solution for third party checks
21,0
Recently registered business partner
50,0
20,0
January 2016
14
To summarise
Key features of Intella
Experience shows that it
• Automated and quick
• Applicable to all industries
• Multifunctional risk assessment and
affiliation check
• Allows you to check all types of third
parties – suppliers/clients
• Advanced reporting (from tables to
visualization)
Intella for Kazakhstan will be
completed soon
Intella - automated solution for third party checks
PwC
January 2016
15
Questions?
Marina
Zvyagintseva
Manager,
Forensic
PwC Russia
Mob.: +7 926 319 30 46
[email protected]
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