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In today’s high-stakes regulatory environment, you cannot afford to take compliance lightly. Risk and compliance teams are under more pressure than ever to conduct thorough Enhanced Due Diligence (EDD).
Understanding who you are really working with—whether it is a new client, a business partner, or an emerging AI company—can mean the difference between avoiding a costly compliance failure and unknowingly engaging with high-risk entities.
In this edition of Risk Hotspots, A Data Pro’s Risk Intelligence Operations Manager, Sanya Hozjan, analyses three current developments and highlights how they can make the due diligence process very challenging. She also explains how businesses can stay ahead of changing regulations, and why Enhanced Due Diligence is no longer optional—it is essential.
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Trump defines Mexican cartels as “Foreign Terrorist Organisations”
Donald Trump’s executive order to designate Mexican cartels as “foreign terrorist organisations and specially designated global terrorists” is expected to bring in a wave of new KYC procedures and enhanced due diligence checks, some of which might even affect US companies.
As per US’ “Legal Ramifications of Designation” of foreign terrorist organisations, “It is unlawful for a person in the United States or subject to the jurisdiction of the United States to knowingly provide ‘material support or resources’ to a designated FTO.” With Trump’s new order in place, the interpretation and investigation of parties who support terrorism, or in other words, support cartel activities, will play a key part for many businesses’ future, both small and big, on both sides of the US-Mexican border.
Companies will likely need to make a fresh due diligence investigation on their clients, as well as make sure that all KYC inquiries are conducted and updated with the needed information that will help identify the existence of cartel relations.
If businesses decide to cut corners in their measures to counter the financing of crime or straight out brush off the importance of enhanced due diligence, they might unintentionally end up providing services to individuals or businesses involved in cartels.
Usually such changes in the law lead to a huge backlog of clients that need to be re-investigated in a short amount of time, before potential penalties for the business are imposed due to failure to meet the new expectations of the government.
In such cases, our recommendation is to look for the assistance of a reliable due diligence company that provides services for your jurisdiction – the experts there can help you set up a plan and deal with large volumes of customer data as quickly and efficiently as possible.
Even after being sanctioned, Russian oligarch held shares in SpaceX through a Delaware-based trust
After he was personally sanctioned in 2018, Suleyman Kerimov managed to retain his shares in SpaceX through a trust under the name Heritage Trust, based in Delaware, US. It was not until June 2022 that further investigation uncovered the real benefactor behind the trust and Kerimov’s shares were frozen.
Using layers of ownership is a common tactic to obscure the actual ultimate beneficial owner (UBO) of assets and is widely known even among people who have no idea what due diligence is and what it does. Although the way chain ownership works in theory is common knowledge, using the expertise of a due diligence investigator who has hands-on experience with such cases can really make the difference between “suspecting” and “knowing”.
While it can be challenging and sometimes even impossible (without an unlimited amount of financial resources), due diligence experts are trained to navigate through complex ownership structures by identifying key red flags in a company’s ownership and following the leads – if needed through multiple jurisdictions, until the final owner is revealed.
The process can be very lengthy and requires a lot of patience for high level of UBO obscuring, so in case you have concerns for the lack of transparency of a client or a business partner, we recommend using the services of a due diligence desk to save on time and frustration in uncovering who you are actually working it at the end of the chain.
You have already learned everything about Deep Seek’s AI model…but what do you know about the people behind it?
The sudden appearance of DeepSeek on the AI scene made almost everyone on the Internet dive deep into the news and learn all there is to know about how this new AI model works, how it affects the market, and how it compares to ChatGPT.
In our Due Diligence department, the first thing that crossed our minds was “who stands behind all this?”. When an innovative new business makes headlines, transparency (or the lack thereof) is usually the first red or green flag in our goal to determine if this is a trustworthy business you should invest in, take in as a client or become a business partner of.
The more information we can find about a company, its owners, and surrounding context of the business, the easier we can connect all the pieces of the puzzle and feel confident about our conclusions on how this business operates and who it is operated by.
For example, did you know that Pei Tian (裴湉 or in English, Tian Pei), who appears as one of the many contributors for Deek Seek-R1, is in fact, according to third-party Chinese company registry sources, no other than the the registered CEO and legal representative of DeepSeek? In addition, while it is a well-known fact in media that Liang Wenfeng (梁文锋) is the founder of DeepSeek and the main driving force behind the company, did you know that according to official registry sources, Laing is associated with not only DeepSeek, but a total of 15 Mainland entities?
If you are curious what is the nature of their business, to what extent is Liang involved in them, and are these companies interconnected, enhanced due diligence services can help you uncover the answers to all these questions, so you can feel confident about your business decisions every time an eye-catching new business appears on the market.
Take the Next Step: Secure Your Business with Enhanced Due Diligence Reports
If you need to uncover hidden ownership structures, get advice on how to meet new compliance requirements, or assess the risk behind potential partners or clients, Enhanced Due Diligence is the key to making informed decisions to protect your business.
If you are facing a high-risk case or need tailored due diligence insights, our Risk Intelligence experts are here to help. Book a meeting today and discover how our Enhanced Due Diligence reports can provide you with the clarity and confidence to act decisively.
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