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08.07.2016 | World-Check leak puts research tool under renewed scrutiny

The database has its critics, but used sensibly it can play an important role in criminal and due diligence investigations.

It may not have generated the media furore that greeted the Panama Papers disclosures, but the leak of what turns out to be an old version of the influential World-Check database raises important issues concerning the value and use of public domain information held on such risk screening tools.

Since 9/11 and the global financial crash, law enforcement agencies and financial institutions have come under increasing pressure to improve their intelligence gathering. The former have been required to do so in order to counter terrorism and organised crime; the latter to comply with an ever expanding raft of regulations and laws that compel them to gain a better knowledge of prospective clients. The reputational and financial cost of not meeting the standards and expectations that have been set are huge. National crime agencies have faced severe criticism for not doing enough to prevent terrorist outrages and thwart criminal networks. Banks have been fined heavily for conducting business, often unknowingly, with sanctioned entities, and, along with many corporates in the race to exploit opportunities in emerging markets, have often found themselves engaged with counterparties who have significant regulatory or criminal baggage.

The task of assembling the information required to make informed decisions about criminal suspects or potential customers is challenging. That accounts for the rise of public record databases such as the Thomson Reuters-owned World-Check. They have spotted a gap in the market and been quick to fill it. Capitalising on advances in digital technology and the mass of readily available online data, they allow users to better understand the integrity of the subjects they’re interested in.  

 The collation and sifting of troves of information – including data on financial crime, sanctions designations, terrorist links and political associations – has proved to be a winning formula for World-Check. It says its clients include hundreds of government and intelligence agencies as well as many of the biggest banks and law firms.  However, such databases are imperfect tools. The recent reported leak of a mid-2014 version of World-Check, containing 2.2 million records, has drawn attention to both its vast store of open source intelligence and media investigations challenging the linking of some subjects to terrorism. World-Check says those featured in the database can request a copy of the data held on them or ask that they consider appropriate updates and corrections, but some subjects have had to threaten legal action to get their records changed or indeed entirely removed. 

While World-Check insists that it applies a rigorous research policy and only uses reputable public domain sources, risk screening databases’ reliance on an often narrow reading of publically available information is one of their principal limitations. That is because they do not always offer a sufficiently comprehensive or nuanced picture of the subject under scrutiny. 

World-Check will often provide clients with the credible data that they need to decide whether to drop their interest in a potential counterparty, but this information may be incomplete or require contextualisation and explanation. So, for instance, an individual who becomes the focus of media attention for associating with extremists may in time turn his back on them.  If this transition went unreported – or undetected by World-Check’s analysts – there might only be a record of his former connections. Similarly, politicians and businessmen convicted of financial crimes in authoritarian countries are sometimes victims of politically-motivated prosecutions. They may be entirely innocent, but their convictions damn them in the eyes of those unfamiliar with their cases.

World-Check and its like are decent sources of information but not decision-making tools.  They will tip customers off if there is something they have to be aware of or understand better. However, they are not designed to give the full story.

Such databases are the starting point of an enquiry, providing plenty of clues, but then it is up to the user to make informed decisions, which sometimes requires employing other sources. These may involve acquiring primary litigation or criminal filings regarding an individual as well as speaking to those who have been in business with, or have specific knowledge of, them.  World-Check and its competitors can play an important role in criminal and due diligence investigations, but wide-ranging research is critical to gaining a proper understanding of an issue, enabling an assessment of whether it represents a problem or not.