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Use: Corporate due diligence

The following indicator is under consideration for this pilot edition of the Barometer: To what extent do products or services exist that use open company data to support due diligence?

Definitions and Identification

'Due diligence' involves carrying out checks before entering into a financial relationship with a company (e.g. signing a contract with a supplier, or opening a bank account for a company). For example, due diligence may involve checking who the owners of the company are, whether the company is still active, and whether the company has filed up to date accounts. Certain organisations are under legal obligations to carry out due diligence as part of Anti-Money Laundering (AML) requirements, but due diligence may also be carried out voluntarily to manage operational and financial risks. In financial services, due diligence checks are sometimes referred to as 'Know Your Customer (KYC)'.

Often, carrying out due diligence involves bringing together multiple sources of data, and putting it in context. Some countries have an active market of due diligence providers who take open company data, process it, and combine it with other sources to allow their users to access an analysis of the opportunities or risks of working with a particular company. They may do this by providing an online tool, or offering a service.

This question is concerned with whether there are tools or services ****that are run from within, or specifically tailored to, the country (rather than global tools that might just happen to include some companies from the country).

The highest scores are available for cases where open data is being used, although you can also record cases that appear to be sourcing data through other means.

Examples of tools and services that would meet this definition include:

  • YouControl from Ukraine provides an online search and detailed profiles of companies based on open and scraped data. It provides a public online search of companies that can be used to explore the kinds of due diligence profiles provided.
  • DueDil in the UK provide access to analysis based on data from the UK Company Register (Companies House) for use in 'Know Your Business' and KYC applications.

Examples that would not meet the definition include:

  • CompanyDilligence.com is a consultancy carrying out bespoke research for any country. It does not provide a data-driven tool or service, or appear to use bulk data from any specific country.
  • OpenCorporates.com aggregates company register data from many countries, but does not offer country-specific analysis products or services.

Starting points

  • Search:

    • [Country] + Company Due Diligence Tools
    • [Register Name] + [Due Dilligence | KYC] + 'Platform'
      • (E.g. 'Companies House Due Diligence United Kingdom' or '
    • 'Who is using [Register Name] data?'

  • Consult:

    • Individuals who may have experience of carrying out due diligence checks on businesses

What to look for?

Look for evidence that can answer the following questions:

  • Who are the main customers for these products and services?
  • Do any of the tools or services appear to make use of beneficial ownership data?

National and sub-national considerations

Examples that only cover a sub-national unit (e.g., particular state or territory) can be included in the research for this question.

Show/hide supporting questions

Existence

  • Is there evidence of this data being used in products/services?
    • No such products or services exist in the country.
    • One or more products/services exist, but they do not make use of open datasets.
      Supporting questions: Where do these products or services appear to get their data from? Please provide evidence of those products and briefly explain your answer.
    • One or more products/services exist using making use of nationally provided open datasets.
      Supporting questions: Please provide evidence of those products and briefly explain your answer.
    • One or more products/services exist making use of nationally provided open datasets, and there is evidence of their widespread use.
      Supporting questions: Please provide evidence of those products and briefly explain your answer.

Elements

  • User groups:

  • There is evidence of these products/services being used by the private sector. (No, Partially, Yes) Answer 'Yes' for more than one example; Answer 'Partially' for a single example.

    Supporting questions (conditional)

    If Partially: Please provide URL(s) of evidence.

  • There is evidence of these products and services being used by government. (No, Partially, Yes) Answer 'Yes' for more than one example; Answer 'Partially' for a single example.

    Supporting questions (conditional)

    If Partially or Yes: Please provide URL(s) of evidence.

  • There is evidence of these products/services being used by civil society (No, Partially, Yes) Answer 'Yes' for more than one example; Answer 'Partially' for a single example.

    Supporting questions (conditional)

    If Partially or Yes: Please provide URL(s) of evidence.

  • Specific features:

  • At least one of the examples cited is making use of beneficial ownership data. (No, Partially, Yes)

    Supporting questions (conditional)

    If Partially or Yes: Please provide the URL(s) of examples using beneficial ownership data.

    If Partially or Yes: If possible, please briefly describe how beneficial ownership data is being used.

  • Do any of the examples that you have identified describe using artificial Intelligence or machine learning? (No, Partially, Yes) Answer 'partially' if you have doubts about the accuracy of claims to be using AI/machine-learning.

    Supporting questions (conditional)

    If Partially or Yes: Please provide brief details of the examples and how they describe using AI/machine-learning.

Extent

  • There is evidence that these uses are having meaningful positive impacts
    • No
    • Partially
      Supporting questions: Please briefly describe the evidence of impact
    • Yes
      Supporting questions: Please briefly describe the evidence of impact

We focus on this indicator on both the creation of products and services using company information, and the use of those services by different sectors. This seeks to capture both economic impacts of open data (on the assumption that such products and services may both generate commercial revenue and re-risk economic activity), and social impacts realised by use of this data by civil society, media and government - accessing the data through intermediaries.

Given that due diligence platforms often combine company information with other domestic sources of intelligence on firms, we assume this may give domestic entrepreneurs building intermediary platforms some comparative advantages: allowing us to look for the emergence of data-using intermediaries at the country level, rather than internationally.

Krasikov et. al. (2020) have raised the question of whether open data on companies is ready for use in enterprise contexts, highlighting further the utility of this indicator to explore how far, in countries that may otherwise have the potential to develop a market of firms using company data, data quality issues are acting as a barrier to this.