Webinar: Exploring shareholder power and control

On 16 May, experts Michael Volkov, principal at The Volkov Law Group, and Bill Hauserman, senior director of compliance solutions at Bureau van Dijk, explored why having information on power and control is a growing necessity for third-party risk management.

The free webinar “Is ‘power and control’ the new beneficial ownership? What’s the new best practice for third party risk management?” was moderated by Ted Datta, director of governance, risk and compliance solutions, Bureau van Dijk, and featured ways banks and corporations can mitigate risk by identifying not only ownership, but also power and control within an organization.

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Key takeaways

• Power and control must be considered along with traditional share ownership
• Blending public and private data is critical to perform due diligence at scale
• Regulator expectations are increasing in line with advancements in technology
• More prescriptive guidance is to be expected, coupled with tougher fines
• Lack of managed data validation exposes you to risk and cost
• Abundance of applications available to test, calibrate, and benchmark your RegTech solutions

What is power and control? This is where a shareholder can effectively exercise control over a decision within an organization, even if they have only 1% ownership. They can do this by forming a coalition using their voting power with a fellow shareholder of, for example, 49.5% ownership while minimizing their own visible ownership impact.

The webinar looks at high-profile examples of how power and control has been used in enforcement from regulators such as the Office of Foreign Assets Control (OFAC) as well as ways that compliance teams can meet evolving due diligence requirements using technology.

Audience poll results

Around 1300 professionals from banking and corporate sectors watched the live broadcast, mostly from the Americas (57%), Europe (22%) and the UK and Ireland (10%). Their responses to polling questions on power and control were as follows:

A controlling owner is not necessarily a majority shareholder. Do you consider this aspect in your due diligence program?

• Yes, and we have processes that address this (29%)
• No, but we are considering this enhancement to our program (21.1%)
• No, we are waiting for more specific guidance or enforcement action (19.3%)
• Yes, and we are now building a process to incorporate this (19.1%)
• No, this is entirely new for our organization (11.6%)

How will the recent OFAC enforcement action and guidance impact you?

• Potentially – we are still working through the implications for our program (44.5%)
• Significantly – we are currently revising our policy and program operations (21.6%)
• Potentially – we have an upcoming review of solutions which this impacts (17.4%)
• Significantly – we are currently benchmarking our technology for improvement (10.4%)
• No impact – we lack C-suite buy-in to enhance areas we know are deficient (6.1%)

Do you have a recent positive experience of onboarding regulatory technologies for third party and/or customer due diligence?

• Partially – we are in the process of onboarding a RegTech application at present (33.9%)
• Yes – we have successfully onboarded a RegTech application and achieved desired return on investment (21%)
• No – our project was challenged by related personnel and/or resource issues (16.8%)
• Partially – we have onboarded a RegTech application but are yet to see day-to-day benefits (16%)
• No – our project was challenged by related data issues (12.2%)

What is the biggest challenge for your 2019/2020 due diligence program?

• All of the below (30.4%)
• Establishing a risk based approach that balances risk appetite and regulatory expectations (30.2%)
• Achieving the right balance of data, technology and people across the function (25.4%)
• Delivering digital transformation that provides a clear business benefit (10.1%)
• Gaining C-suite buy-in to adequately resource the program (4%)

You might be interested in

• Register for the free webinar “Is ‘power and control’ the new beneficial ownership?”
• Register for a free trial of Orbis, the world's most powerful comparable data resource on private companies