TSG’s comprehensive due diligence enabled our client to navigate the complexities of onboarding a politically exposed person (PEP), providing critical insights into the subject’s background and potential compliance risks.
The Problem
Our client, the private arm of a bank, aimed to onboard a new customer who had previously held a senior position in the Russian government.
While the client was aware of the political background and former government roles, they needed to understand the subject’s source of wealth (SOW) and current influence due to their former positions.
This high-stakes onboarding process required a thorough investigation into the subject’s background to ensure compliance and mitigate potential risks associated with political exposure and corruption.
The Solution
To address this challenge, TSG engaged three senior members of our team specialising in the CIS region. Our approach involved a deep dive into the subject’s history, starting with comprehensive public record checks.
We uncovered that during the 1990s, the subject was involved in organised crime in Russia, including arms smuggling, which was a primary source of their initial wealth. Our investigation also revealed multiple instances of money laundering, tax evasion through offshore corporate structures, and other dubious business practices.
Moreover, leveraging our regional and country-specific expertise, we conducted a thorough review of available information. Our team identified and assessed the political connections risk tied to corruption, bribery, and money laundering.
We also evaluated the potential influence the subject still wielded in Russia, given the country’s geopolitical landscape and current status. This meticulous process included discreetly gathering insights from relevant local sources without alerting the subject.
The Impact
Our investigation provided the client with a comprehensive understanding of the corruption scandal’s evolution and current status, as well as the internal situation of the entity.
We uncovered that the entity was no longer under direct investigation by the local anti-corruption agency; instead, the focus had shifted to its former principals responsible for past procurement activities.
Our findings revealed the extent of the entity’s reliance on connections with high-ranking military and government officials to secure projects, particularly those from overseas.
Importantly, our insights highlighted that several former leaders involved in the corruption activities had been sentenced to prison terms, prompting a management restructuring within the entity. This restructuring aimed to improve compliance and reduce the risk of future corruption.
Our client used this detailed report to assess the risks associated with establishing a business relationship with the entity.
The report’s actionable intelligence enabled the client to implement targeted risk mitigation plans, ensuring that their due diligence process adhered to the highest standards and safeguarded their interests in the region.