Sam Hardy

Sam Hardy 

Posted Tuesday December 9, 2014
 

Launching the 2014 Arachnys Compliance Trends Report

Today, as reported in Compliance Week, we launched our newest research report analysing global trends in the compliance sector. The 2014 Arachnys Compliance Trends Report charts recent key due diligence issues facing the financial sector, law firms and multinationals. The report combines analysis of search trends over the last year across 200 markets on the Arachnys enhanced due diligence platform alongside interviews with leading professionals in the sector.

We don’t – and never will – monitor individual customer searches, but we do keep track of a range of search statistics including:

  • which countries are searched;
  • whether translation tools are used;
  • whether adverse terms lists are used; and
  • the search method used.

This data has allowed us to paint a picture of the due diligence sector and see where our customers have focused their attention over the last year.

Read the the full report here (executive summary below).

To speak to our research team about this report or any other Arachnys content please email support@arachnys.com.


Executive summary

China ranks first for due diligence and compliance searches
In 11 out of 12 months, the largest number of searches run by our customers was in China. While the country’s leading position was expected, the scale is still striking: our customers ran 2.5 times more checks on Chinese individuals and entities than in the next most popular market, Russia.

Trend report

New sanctions rounds drive demand for data
Russia saw several huge spikes over the last year as the due diligence sector responded to the expanding sanctions regime against the country. Several of our customers identified Russia- Ukraine sanctions as being the single biggest challenge they face as compliance professionals, particularly in determining how far one designation would impact on linked entities.

China, Mexico and Nigeria are the ‘new normal’
We were interested to see a continually high level of attention paid to Mexico and Nigeria. Customers remarked that, in addition to China, these two markets symbolise the ‘new normal’ for the majority of their compliance activity: high growth markets with several sectors experiencing heavy foreign investment (energy, infrastructure, construction and FMCGs, for example) coupled with serious and complex compliance and regulatory challenges. Mexico’s newly liberalised energy market was highlighted by one user: while highly attractive to foreign investors, Mexico’s federal structure, poor corporate transparency and entrenched corruption mean that due diligence researchers have to work ever harder and dig ever deeper to meet standards.

Compliance activity follows the money
Our analysis of the BRIC and MINT economies also confirms that compliance and due diligence follows the money. As countries receive more foreign direct investment the amount of attention they get from due diligence analysts increases. This may not be revelatory but it is important. For banks and multinational businesses moving into an expanding number of markets, the need for due diligence increases as does the pressure to prove compliance. This challenge has been made even more acute with the heightened regulatory pressures from laws such as the US Foreign Corrupt Practices Act and the UK Bribery Act.

Tools and data for investigators in emerging markets are improving
While the pressure to strengthen compliance procedures is increasing, so is the access to the necessary data to do so. Including developed markets, our customers searched and pulled results from over 200 markets worldwide in the last year. This highlights that countries around the world from Brazil to Benin are offering up more and better data on the companies they host. We think that is a good thing.

For more analysis on global trends in corporate data openness, visit our Open Data Compass at compass.arachnys.com.

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