Creditinfo awarded contract as the service provider for the Credit Information System of Seychelles
Creditinfo to establish a new Credit Information System for the country.
London, UK – 11th January 2022: Creditinfo Group, the leading global credit information and decision analytics solutions provider, today announced that it has signed a contract to design, implement and support a new Credit Information System (CIS) for the Central Bank of Seychelles (CBS).
The contract – which will see Creditinfo’s solution rolled out over the next 12 months – makes CBS the 10th central bank to procure a credit information solution from the company.
At the end of 2020, the Seychelles population stood at 98,963, out of which there were approximately 20,099 active retail credit consumers. Seven commercial banks, all licensed and regulated by CBS, are currently the main institutions granting credit facilities to customers. A local credit union and two micro-finance institutions, also supervised by CBS, are the other major providers of credit facilities.
One of the recommendations in Seychelles’ Financial Sector Development Implementation Plan adopted in 2014 was the need to enhance the effectiveness of the existing CIS operated by CBS, inclusive of broadening the scope for the capture of information across all relevant credit providers. In this context, CBS initiated a tender process in April 2021, inviting credit information solutions providers to submit proposals to develop and implement a new CIS. The contract has ultimately been awarded to Creditinfo.
The solution will include scoring, benchmarking, and the implementation of external data sources. Creditinfo will also provide training, consultancy and ongoing support services for the management of the system over the next five years to ensure that CBS employees, local lenders and data providers have the necessary knowledge to make the new CIS a successful endeavor.
Once established, the new CIS will support existing lenders and, over time, onboard other credit data providers, including fintech companies, state-owned enterprises, hire purchase providers, credit sales and financial leasing companies, insurance companies, amongst others. Hence, the new and expanded CIS will support the incorporation of additional data to supplement traditional sources and ultimately provide more individuals and businesses with the financing needed to realize their goals and grow the economy. In addition, the enhanced system will assist the overall mitigation of credit risk.
Samuel White, Regional Director at Creditinfo commented: “While the Central Bank of Seychelles currently has a credit information system in place, it doesn’t meet the market needs of today, and certainly doesn’t enable it to realize the future ambitions of the country and its economy. We’re delighted to win this tender to put in place the technology and knowledge base to help open doors for individuals and small and medium-sized enterprises by increasing access to credit.
We see huge untapped potential in the market, and we are excited to work with our 10th central bank customer to establish a credit information system fit for the future. Once operational, this new system will enable more responsible lending by empowering local credit providers with the data they need to ensure they manage lending risks appropriately, ultimately boosting access to finance for individuals and small businesses.”
Caroline Abel, Governor, Central Bank of Seychelles, said: “Seychelles has a vibrant financial services ecosystem, and access to credit is an important aspect as we look to boost financial inclusion in the market and look at ways to grow our economy. At the same time, lenders should have access to appropriate data to have a better overview of the creditworthiness of borrowers, be able to assess credit risks and make sound financial decisions. Information collected through such a system can also be used for analysis and monitoring in the areas of financial inclusion and stability.
The CBS is therefore looking forward to the collaboration with Creditinfo over the next five years to have a modern credit information system that is in line with industry standards, ultimately assisting the development of the credit environment and overall financial sector.”
Paul Randall, CEO of Creditinfo Group added: “Creditinfo has been effective in strengthening the financial infrastructure in numerous countries across the world, and working with central banks to create a robust and fair way to assess risk and credit affordability. We are looking forward to supporting the Central Bank of Seychelles with their implementation of a future-looking credit information solution and widening access to the information and financing that will be key to future business and economic growth in the country.”
-ENDS-
About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the largest global presence in the field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest lenders, governments and central banks globally – all with the aim of increasing financial inclusion and generating economic growth by allowing credit access for SMEs and individuals.
For more information, please visit www.creditinfo.com
Media Contacts:
Matt Silver
Babel PR for Creditinfo Group
+44 (0)20 7199 3997
Creditinfo awarded license to become Malta’s first Credit Bureau
Creditinfo Malta will help local credit providers take a more intelligent approach to risk and boost financial inclusion.
London, UK – 21st December 2021: Creditinfo Group, the leading global credit information and decision analytics solutions provider, today announced that its Maltese business has been granted the license to act as a Credit Reference Agency, officially recognizing the Creditinfo Malta as the first licensed credit bureau in Malta.
This license will enable the company to launch a credit scoring system for Malta, and collaborate with local banks and lenders to create dedicated scoring products and strategies, tailored to their needs and risk appetite.
Consumers and SMEs in smaller markets like Malta are less likely to obtain financing than those in larger market with more established financial infrastructure, due to lack of information about their credit history. A credit reporting system – like the one Creditinfo is putting in place – helps to provide the information on borrowers and their financial situation lenders need to derisk the system and give them the confidence to widen access to financing.
The deal, which will see Creditinfo play an increasingly important role in the Maltese market, strengthens the company’s relationships with two key local authorities, the Malta Business Registry and the Malta Financial Services Authority, who are equally invested in growing the Maltese economy and boosting financial inclusion.
Clifford Debono, Country Manager of Creditinfo Malta commented: “A formalized credit reporting system in Malta should help open doors for small and medium-sized enterprises that have long been closed, by increasing access to credit. That will in turn enable them to grow, create jobs and benefit the overall economy.
“We see huge untapped potential in Malta, and we’re excited to establish the country’s first ever credit bureau, which will be a key driver of digitalization in Maltese financial services., ultimately boosting access to finance for individuals and small businesses.”
Paul Randall, CEO of Creditinfo Group added: “Creditinfo has been effective in strengthening the financial infrastructure in numerous countries across the world. We’re looking forward to seeing how the local lending landscape develops as we roll out our market leading credit bureau solution in Malta, derisking the financial system and widening access to the financing that will be key to future business and economic growth in the country.”
Ends
About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the largest global presence in the field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally – all with the aim of increasing financial inclusion and generating economic growth by allowing credit access for SMEs and individuals. For more information, please visit www.creditinfo.com
Media Contacts:
Matt Silver
Babel PR for Creditinfo Group Creditinfo@babelpr.com
+44 (0)20 7199 3997
New Creditinfo Jamaica Country Manager encourages Jamaicans to be proactive
Christopher R. Brown who was appointed as the new Country Manager for Creditinfo Jamaica on August 11, 2021, is encouraging Jamaicans to “be vigilant in guarding their credit history and their credit data and in managing them” to ensure there are no surprises when individuals or businesses seek to access services which require a credit report.
Brown, in an interview with the Jamaica Observer, reminded Jamaicans that they are entitled to one free copy of their credit report each year by law. He said Jamaicans should go to any of the credit bureaus and request their credit report each year and scrutinise it for “errors or outdated information” and where these are found, “they can then lodge a formal dispute after which it is the responsibility by law for the institution that they have lodged the complaint against, to investigate and correct it, once it is proven that it is an inaccurate record that is kept for that individual”.
He said errors can occur in the case where people may “have closed an account and completed payments on a loan account or a mortgage account, or a hire purchase agreement, and unfortunately it is not updated in the system and it is negatively impacting their credit score. So even after you have closed an account or some contract, or some credit cards or loans that you have paid, it is good to check to ensure those information are updated in the system so that your credit report is always current and up to date, because managing your credit is very essential in these days where credit is king and so fundamental to economic livelihood and, by extension, economic growth.”
He told Sunday Finance that if the entity against which the error complaint is brought, investigates and validates that there was an error, the law requires an updated credit report to be generated and dispatched to the institution which the individual had sought to do business with in the last six months. Whether terms or conditions of any agreements change after the updated information is then to be negotiated with the entity with which the individual is doing business. He stressed the importance of having the records updated because entries stay on the report for seven years.
Brown said getting Jamaicans to be vigilant in guarding their credit data is the message Credit Info Jamaica is pushing.
Credit Info Jamaica is the first credit bureau that was established in the country following the passage of the Credit Reporting Act in 2010. The company, which started its Jamaica operation in 2011, is part of a global network which has operations in Europe, Africa and sections of the Caribbean. In the region it also has facilities in Barbados, Guyana and the Eastern Caribbean.
“We see ourselves as an important part of the local financial infrastructure…part of the push for economic growth,” he outlined. Credit bureaus “have been a fundamental part of the whole improvement in how individuals and institutions now manage their risk in an integrated way. Whereas in the past, institutions would have to take the information that is given to them either by the client and other sources that they have to use intelligence to gather, now they can get it instantly, automated and at the click of a button, they can have the information of a customer sitting infront of them. It makes the application process more efficient and faster. It allows institutions to know how and who they can market their products to and what type of products they can market to individuals. It allows them to determine the credit terms that they will offer based on the credit history associated with the individual,” he added. He indicated that this has seen Jamaicans being more responsible because the list of institutions which credit bureaus collect information from to create a credit profile on an individual is extensive.
Article was originally published on the Jamaica Observer
Edwin Urasa appointed new CEO of Creditinfo Tanzania
New CEO Creditinfo Tanzania
Press Release
London, UK.
30/11/2021
Creditinfo Group is pleased to announce the appointment of Mr. Edwin Urasa as new CEO and Executive Director of Creditinfo Tanzania effective 01st November 2021. He is replacing Mr. Van Reynders whose tenure ended in April 2021.
Edwin brings 10 years of experience from the local banking industry having spent significant time around credit and risk management, recently before joining he was responsible for the Retail and Micro-SME segment at NBC Bank as Head of Retail Credit.
“I am especially excited to join Creditinfo Tanzania, which has been in operation for the last 9 years and has over the years continued to grow rapidly enabling small to large organizations effectively manage risk and support the government and banking community providing responsible lending in Tanzania. I am looking forward to expanding the companies’ product portfolio and services through application of best practices while leveraging Creditinfo global knowledge and expertise”.
“We are very excited to have Edwin Urasa join us as the new Creditinfo Tanzania CEO. With his vast knowledge and experience in the Tanzanian banking and credit industry, we have no doubt that he will lead Creditinfo Tanzania to greater heights and move the company’s journey forward in pushing our innovative solutions to the Tanzania market as well as pushing one of our core pillars – financial literacy, to the public at large”, says Paul Randall, CEO of Creditinfo Group.
Edwin holds a Bachelor Degree in Commerce (Hons), Majoring in Finance from the University of Dar es Salaam, an MBA from Edinburgh Business School at Heriot-Watt University-UK and has also several certifications namely, a Mortgage advisor (CeMAP)-UK, Modules in Commercial Credit from Moody’s Analytics-USA, and Risk Management from City University -UK.
ENDS.
PR contacts:
Marketing Manager/ PR for East Africa
Phidi Mwatibo
Email: Phidi.mwatibo@creditinfo.com
Creditinfo Group, TASDEEQ, PACRA and APL partner with Pakistan Banks’ Association to facilitate wider access to housing finance
Consortium will develop a market-level application scorecard and income estimation model to boost financial inclusion in Pakistan
LONDON, UK, 21st October 2021 – Pakistan Banks’ Association (PBA) recently announced that it has entered into a strategic partnership with a consortium of leading financial services and technology businesses to improve access to finance for low-income segments of the population currently excluded from traditional housing finance.
The consortium, comprised of Creditinfo Group, a global credit information and fintech service provider; TASDEEQ, Pakistan’s first SBP Licensed Credit bureau, offering cutting-edge reports, statistical scores, and analytical tools for the financial industry for efficient credit risk and strategic decision making; Pakistan Credit Rating Agency (PACRA) and Analytics Pvt Ltd, a leading Artificial Intelligence, Business Analytics, Big Data Analytics and Data Sciences solutions provider, will work together to develop for PBA a market-level application scorecard and income estimation model aimed at streamlining risk assessments and enabling a wider pool of applicants to access financing for their housing needs.
The consortium brings together industry-leading credit risk analytics knowledge, alongside extensive experience in Pakistan and emerging markets globally. The development and deployment of the automated income estimation & credit assessment methodology will be overseen through the PBA platform.
This project is being managed by the PBA Technology Working Group, comprising CEOs and members of Bank Alfalah, HBL and Faysal Bank as well as the CEO of PBA and a senior official of State Bank of Pakistan. This is a novel and unique project, and the first of its kind in Pakistan, where a scorecard will be developed using an alternative source of data.
The scorecard project will support the Naya Pakistan Housing Programme (NPHP), a government-backed initiative providing low-cost, affordable housing to deserving individuals in Pakistan that is expected to be a catalyst to accelerated economic activity and increased job opportunities in the region following the negative impact of Covid-19.
Mr. Tawfiq Husain, CEO, PBA stated, “We are very excited with the transformational impact this project can have on our members’ consumer lending and credit initiation and risk management capabilities. Starting with Low Cost Housing Financing, we hope to be able to put this model to use for other products in consumer lending.”
Mr. Omar Khalid, COO TASDEEQ commented: “TASDEEQ, PACRA and Analytics together bring a diverse array of expertise to the project. This synergy coupled with Creditinfo’s comprehensive global experience will be vital in development of low-cost housing credit scoring and income estimation models for the existing as well as new-to-bank customers utilizing alternative data sources. We are excited to be working with PBA to provide the banks with tools for quick and accurate risk decision making and working towards a more financially inclusive Pakistan.”
Mr. Samuel White, Regional Director, Creditinfo, commented on the partnership: “Our unique global experience will be complemented by the consortium partners’ local market knowledge to develop a robust credit risk and affordability solution in Pakistan. The project will provide PBA members with the required tools to make accurate risk decisions on underserved segments of the population, which is fundamental to increasing access to housing finance. Creditinfo is excited to work with the PBA to support the expansion of financial inclusion in Pakistan and help drive economic activity in the region”.
-ENDS-
About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the largest global presence in the field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally – all with the aim of increasing financial inclusion and generating economic growth by allowing credit access for SMEs and individuals.
For more information, please visit www.creditinfo.com
About TADSDEEQ
TASDEEQ is Pakistan’s first SBP Licensed Credit bureau and a leading credit information services company that leverages data analytics, technology, and industry knowledge to enable financial and non-financial institutions achieve their strategic goals with minimizing their credit risk and help consumers secure their future.
For more information, please visit www.tasdeeq.com
About PACRA
PACRA is, transforming both the rating business and the industry in line with the best practices. Today PACRA has more than 450 opinions outstanding and covering 60+ sectors and sub-sectors of economy.
Since inception, PACRA has over 8,000 rating opinion a testament of PACRA’s expertise, exceptional command, market leadership, and the confidence reposed in its opinions. PACRA rates more than 40% of KSE-100 index companies and 25% of the private sector debt, translating into a rating opinion on every 4th Rupee of debt raised in Pakistan.
The same trust and confidence have also been reposed by foreign regulators in PACRA’s ability and expertise as a CRA. PACRA has entered into a Technical Collaboration Agreements for the formation and operations of CRAs in Bangladesh (National Credit Ratings) and Sri Lanka (Lanka Rating Agency).
For more information, please visit www.pacra.com
About APL
Analytics (branded as Tenx.ai in North America) is a leading Artificial Intelligence, Business Analytics, Big Data Analytics and Data Sciences solutions provider. Having customers in the United States, Middle East and Pakistan, the company has accomplished a proven track record of successfully delivering high impact and complex projects.
For more information, please visit www.analytics.com.pk
About PBA
Pakistan Banks’ Association is a private limited company incorporated under the Companies Act 1913, (now the Companies Act 2017). The principal activity of the Association is to promote, advance and protect rights, privileges and interests of member banks/ financial institutions. Currently, it has 44 members on all Pakistan basis.
For more information, please visit www.pakistanbanks.org.pk
Media Contacts:
Matt Silver
Babel PR for Creditinfo
T: +44 (0)207 199 3977
Increased use of credit bureau data in Lithuania
The use of credit bureau data is growing along with economic activity, although businesses tend to undertake additional precautions
The INTRUM EPR 2021 survey published in June reported on the growing demand for pre-payments against a decreasing trend of conventional risk management measures, such as credit history screening, insurance and factoring.
The current situation in the business sector could benefit from some clarifications and comments. In turbulent and uncertain times – and lockdown could rightly be said as being one of these – entrepreneurs tend to undertake additional safeguards, e.g. pre-payments. However, any quantitative easing measures, such as material support offered in the form of soft credits or subsidies, enabled many businesses to maintain their liquidity at least for some time. This is why the corporate performance results were not as devastating as they were during the Great Recession, when manufacturers importing commodities were forced to allocate all of their funds for pre-payments to their suppliers.
Meanwhile, the statistics demonstrates some late payments to the partners in 2021 in the sector of hospitality industry (by 9 days, from 41 to 50), in transport (from 56 to 62 days), in services (from 38 to 41 days), in processing industry (from 38 to 40 days). In contrast, in the financial operations sector, the payment terms have become shorter.
Quite reasonably, one may wonder what are the reasons behind shorter payment terms – can these be explained by precautions taken by the suppliers or by an improving economic situation?
I would like to draw the attention to the fact that in the times of the pandemic shareholders would recommend public sector representatives tightening payment gaps to enable the business sector to improve liquidity in the private sector. In the private sector the medium-term payment gaps were affected by a more resilient economic structure, as businesses suffering from liquidity shortage made only a fraction of all businesses.
Moreover, account needs to be taken of the fact that as many as 60 percent of companies responding to the INTRUM survey in Lithuania admitted anticipating recession in contrast to economic forecasts showing a clear recovery.
Lithuanian business market is rather optimistic: the economic evaluation index in Lithuania has already reached its pre-pandemic level (116 vs. 110), this indicator was higher only in 2007 on the eve of the Great Recession. In addition, all sectors last May demonstrated a growing confidence index. Commercial confidence index grew by 9 percentage points, while in the service, industry, and construction sectors it grew by 7, 4, and 1 percentage points, respectively. Only the consumer confidence index dropped by 3 percentage points.
In parallel, a rapid growth in the real estate prices and demand is being reported along with the signs of growth in the prices of commodities and inflation. All these factors may signal the approaching peak in an economic cycle, which explains the lingering anxiety about a possible recession due to the phasing-out of economic stimulus measures.
One of the most popular support measures – tax deferrals – are drawing to an end: default interests and tax recovery procedures will not be calculated until 31 August 2021 and for two subsequent months; one may expect to see a more realistic state of business health towards the end of the year.
Nevertheless, the following conclusion has to be drawn as a comment on the use of credit office information systems by the organizations: the number of inquiries recently has been changing along with the economic activity – within the first 5 months the number of inquiries increased by 12 percent compared to 2020 year-on-year, and by as many as 25 percent compared to 2019 year-on-year.
Jekaterina Rojaka,
Head of Business Development and Strategy,
Creditinfo Lithuania.
How to build an impeccable credit history
Within the first days of our lives, we are all issued a birth certificate which becomes the first document of the pile that we are to collect during our lifetime. Birth certificates are followed by passports, then graduation certificates, college or university diplomas. Reaching the age of majority entails, among other things, responsibility not only for one‘s professional career, but also for financial decisions which are reflected in the credit history. In other words, credit history is a yearbook of one‘s financial obligations, which is read by banks, leasing companies or other institutions in order to assign you to the categories of either reliable or less reliable clients and decide whether they are willing to accept you for credit.
No Credit Without Credit History
According to the surveys, more than half of the adult population of Lithuania are active users of credits to finance purchase of the real estate, vehicles, household appliances, furniture, PCs, phones, etc.
To get a credit, you apply to the banks or leasing companies. They first look into your credit history which shows how well you performed our financial obligations in the past, including consistency of timely payments for electricity, telecommunication services or garbage removal, also timely repayment of other credits and any overdue debts.
A good or bad credit history determines whether you will be accepted for credit to buy a new refrigerator instead of an old broken one, whether sellers will agree to sell you a new phone just after signing an agreement on payment in installments over the next two years. If the credit history is sound, you can expect the most favorable conditions and trust of the seller. A poor credit record means that you may have to pay the entire amount at once.
A History of Amounts and Discipline
The credit history reflects two types of information. The first one is an account of financial obligations, credits in the banks, consumer loans from credit institutions or peer-to-peer lending platforms, leasing, etc. Lenders use this information to assess the client‘s budget sufficiency, i.e., the percentage of income spent for servicing the existing debts. The second type of information is the track record of repayment of debts indicating the discipline of making payments for credits, mobile phone, internet, cable TV and other bills.
Banks Favor Positive Rather than Empty Credit History
The staff of the credit bureau is often asked what a good credit history is. One may think that lenders favor those who never had a loan, leasing or credit card, and never delayed payments to service providers, hence their credit history is empty. Yet the lenders‘ approach is different. On the one hand, an empty credit record may indicate that you had no need to borrow or to buy on lease in the past. On the other hand, who is more trustworthy: a client who repaid his lease or loan in time, or a person who never had any financial obligations? A survey conducted by “Mano Creditinfo“ revealed that banks tend to be more favorable towards clients who had financial obligations in the past as they are more predictable.
Financial institutions tend to trust clients with good credit history and offer them better conditions, such as a lower down payment, lower interest rate and more flexible repayment terms. For instance, Swedbank‘s Institute of Finances earlier advertised that good credit history may save up to several thousand euros in interest on home loans. Good credit history will save you up to EUR 500 on a loan for a EUR 5,000 worth car, or up to EUR 1,700 on a EUR 10,000 worth car lease.
Can You Fix a Bad Credit History?
Yes, you can, but it will take time and effort. There are several factors that determine a bad credit history, including high financial obligations, excessive and unreasonable borrowing, borrowing to service outstanding debts, delayed payments and other. If your credit history contains any such events, you have to brace yourself for a hard time, as cosmetic adjustments will not erase or eliminate them. If you tend to assume too many financial obligations, you will have to reduce their number and curb your appetite for borrowing for some time at least. If you have any overdue payments, you are recommended to make the payments as soon as possible and never delay them again.
Financial institutions usually analyze the credit history of the recent 2 or 3 years, and the negative impact of the sins of the past gradually fades away over time. Thus, if you have a poor credit history and decide to change your approach towards your financial obligations today, financial institutions may still have questions about your past financial behaviour for a couple more years to come.
Mistakes to be Avoided
Information about the financial relations and obligations will accompany you throughout your entire life telling a story of either a high financial discipline or lack of it. If you decide to borrow, you must carefully assess your ability to cover the debt and think about the ways to ensure the repayment even if you lose your income. Negative records appear in your credit history very quickly, within a month from the day the payment was due. Erasing this record from your credit history will take years, though.
Aurimas Kačinskas,
CEO – Creditinfo Lietuva.
KYC: How compliance can improve business performance – post event summary
Know Your Customer (KYC) is not just a set of regulations to comply with. With the right data, processes, and technology, it can be a valuable tool to understand our customers better and thus be able to support them throughout their challenges, while at the same time shielding business owners from unnecessary risk. We wanted to delve a little deeper into this issue and so hosted a webinar with leading experts on the regulatory environment and financial crime to delve into the topic. Our panel of experts discussed what organizations need to do to de-risk their operations and how they can set themselves up for future success.
Our expert panel was made up of Graham Barrow, Director and Presenter of the Dark Money Files podcast, Viljar Kähari, Co-founder of PWC Legal Estonia and Gandolfo Iacono, CEO of LexisNexis Russia CIS & Eastern Europe.
Chaired by our Director of Global Markets, Brynja Baldursdóttir, the webinar drew in over 500 registrants and 300 attendees from 33 different countries, all eager to better understand the opportunities compliance technologies can bring to a business.
Brynja began the session by explaining that KYC is not just a box ticking exercise, it is a necessity for better business in 2021. The key thing to consider is that KYC is all about trust.
Dark Money
To begin, Graham contextualized the important role that KYC plays in protecting the financial system from ‘dark money’. Dark money, “which is any money that enters the financial system for which you cannot show for certain where it comes from”, has real victims that do not show up on paper. Dark money must come at a cost to somebody. Better KYC processes are not just protecting customers and businesses, it also protects taxpayers in corrupt countries and potential victims of money laundering all over the world.
Part of the issue with stopping or at least resisting the flow of dark money according to Viljar Kähari, is that “banks interpret KYC requirements very differently. It seems that client onboarding and monitoring processes are sometimes much more important than actually understanding a client’s business and monitoring transactions.” This alludes to what Graham believes the larger problem to be, that, “there really is a big difference between banks being compliant in terms of the anti-financial crime requirements, and stopping dirty money entering the system.”
Understand your customer
To shift from just being compliant with regulations to stopping financial crime with compliance we must progress from Knowing Your Customer to ‘Understanding Your Customer’ (UYC), a phrase Graham coined during the discussion. He commented that this is “because if people are intent on laundering money, they will provide beautiful documentation to get into the financial institution, but that documentation will need to be lies.” If we can go beyond knowing our customer to understanding them, then we can see through even the best lies. “Because if you force people and criminals to lie when they create the accounts documentation, you then have good documentation to monitor the downstream transactions. And that is the control. It is getting them to say in detail what they want you to hear and then monitor in detail what they actually do. It’s the difference between those two things, which is your control.”
Data, data, data
Our panelists agreed that the bridge between KYC and ‘UYC’ is data. Graham commented that “the ability to take KYC data, and feed it into your transaction monitoring system intelligently, is probably the single most important thing we can do. But we must sell one idea to all our customers. The idea that KYC is not an ordeal we have to put the customer through. It is the most important thing we can do to protect them.”
There are barriers that compliance teams need to break through to get to this next level of KYC. Gandolfo says, “the issue is that we see compliance or AML as a cost centre”. Compliance departments need to be seen as an asset hat needs serious data and software,” and many managers are not aware of this. Managers need to see the value that effective compliance brings in potential fines avoided. Viljar concurred, “compliance departments are overloaded. They do not have the resources they need; they do not have access to different databases.”
Perception
The perception of compliance needs to change for organizations to allocate the resources teams need to resist the flow of ‘dark money’. Viljar stated that “changing the mindset of compliance officers from an inspector to a business advisor is more important and necessary today. Because we cannot assume that all clients are criminals unless they can prove otherwise. It is the common understanding now because you need to provide a massive amount of information and documentation to show that you are getting your money legally. And that is why I’m thinking that the compliance function must become more proactive at finding practical solutions rather than just saying ‘that this work cannot be done.’”
To make this organizational culture shift it will take time, but our panel agreed that a realistic alternative is to outsource KYC and AML, provided there is not a “homogenization of risk appetite”. Viljar noted that when a company does not have access to a public register, “there are several service providers who can easily help to solve this problem. Just the banks and other regulated financial institutions must trust service providers and user services.”
Change of mindset
Summarizing the event Brynja rounded up the discussion by pointing out that the most important takeaway from the webinar is that as an industry, we need to start changing our mindset from knowing our customer, to understanding our customer. We need to vastly improve international cooperation in terms of legislation and regulation, and we can refine processes around KYC in terms of increasing shared services, using data and technology in a smarter manner which ultimately should make sure that we as businesses make our processes reflect our appetite for risk. It is time to make the switch from simply knowing, to understanding our customers.
Learn more
This virtual event was a huge success from our perspective which gathered an incredibly engaged audience. Thank you so much for all your brilliant questions – our panel enjoyed the lively debate!
If you would like to re-watch the session, or if you were unable to attend, please use this link to learn about the benefits KYC compliance can bring to your business.
Number of bankruptcies up by 26% in Estonia
Creditinfo’s bankruptcy survey revealed that the amount of bankruptcies grew last year for the first time in ten years and increased 26% compared to 2019 in Estonia.
Last time the number of bankruptcies grew significantly was due to the global economic crisis in 2008 and 2009 when the growth measured up to 150% in annual comparison. There was marginal growth (+2.4%) in 2017, but this was a shift by eight companies. In 2020, the number of bankrupt companies increased from previous year’s 271 to 341 ( 26%). The share of companies that have gone bankrupt is at 0.15% of all registered companies.
“The amount of bankruptcies remained at a low level in 2020, but there was still a trend of significant growth in the number of bankruptcies that we have not seen since the beginning of the previous great economic crisis. It may be assumed that this was partly due to the effects of the corona crisis, but since the bankruptcy process is long-term, we will probably see the greater effect here next year,“ explained Creditinfo Estonia’s analyst Helen Tinkus.
There was also growth in the last decade’s continuous downtrend of the number of asset-less companies, where bankruptcy rates dropped due to the absence of assets. During 2010-2019 the number of dropped bankruptcies decreased on average by 14% yearly. In 2020, the number of asset-less companies increased by 49%.
“This might have been caused by the fact that the economic environment had become insecure because of the corona crisis. More business plans failed completely and the companies were unable to gather any assets at all before the insolvency situation developed. At the same time, there were also some asset-less companies that showed substantial turnover numbers in the years prior to the bankruptcy,“ Tinkus added.
The areas with the highest rate of bankruptcy are still hospitality and catering, manufacturing industry and construction. The rate of bankruptcy was above the average in wholesale and retail as well.
“There have been no changes in the fields of activity with the highest bankruptcy rate in the recent years. But the share of bankrupt companies in the hospitality and catering sector grew faster than in others, both compared to other fields of activity and to previous periods. These are the fields that was influenced the most by the corona crisis and the restrictions. Based on the payment defaults and wage compensations statistics, we can predict a greater effect of the crisis on the companies operating in the field also in the coming years,“ Tinkus stated.
Creditinfo Estonia Ltd has conducted bankruptcy surveys about Estonian companies since 2000. During the 20 years the number of bankruptcies has both increased and decreased in waves, reaching the peak level in 2009 as a result of the global economic crisis. In 2011 the number of bankruptcies fell by a remarkable 40%, in 2012 by 20%. Bankruptcies have decreased steadily also in the following years, reaching the pre-crisis low level in 2015.
Ends.
Media Contacts:
Rain Resmeldt Uusen, Head of Marketing – Creditinfo Estonia
Email: turundus@creditinfo.ee
Tel: +3725018998
Creditinfo analysis reveals Lithuanian textile industry severely hit by the pandemic
According to Creditinfo Lietuva, the textile industry of Lithuania is among the business areas which was hit by the pandemic extremely hard. In some sectors of the textile industry, the revenue is 30% below where it was before the pandemic, clothing manufacturers lost 11.7% and leather companies 31% of their employees. 17% of clothes making companies and 15% of textile manufacturers have been given high or very high bankruptcy risk scores.
“Textile industry, an extremely important business sector in Lithuania, is facing unprecedented challenges all over the world. Together with services, tourism and catering, the textile business has been suffering from a severe hit the consequences of which will persist for many more months to come”, says Aurimas Kačinskas, General Manager at Creditinfo Lietuva. “Unfortunately, there is little room for optimism in the immediate future of the sector, which means we‘ll have to keep business partners of the sector under a magnifying glass for quite some time”.
Further Downfall by 30% is Forecast if Global Lockdown Continues
A few days ago, “Coface” published its latest analysis of the global economy, where the economic forecast was downgraded only for the Central and Eastern Europe textile sector, while the textile industry itself, like global textile, was moved from high risk to the very high risk category. It means that no recovery or return to the pre-covid level is expected in textile industry until the end of the year. According to “Coface”, in the best-case scenario the decline of the textile industry will come to a halt at the end of the year, provided there are no new lockdowns introduced globally. If the countries worldwide continue imposing movement and social contact restrictions, this year will only see a further shrinking of the textile industry down to 30 percent of its volume in 2020, the year of hardship.
According to Statistic Department of Lithuania, the textile industry of Lithuania is made up of companies engaged in clothes making, textile manufacturing, leather processing and leather manufacturing businesses.
Employment at Leather Companies Plunged by 31 per-cent
According to Creditinfo, 949 companies reported textile-related activities as their core business last spring; there are 942 of such companies this year. Although the difference is slim, the true impact of the pandemic is revealed by the employment statistics. For instance, over the period of one year the number of employees at the clothes making companies dropped from 15,142 to 13,364 (11.7 per cent), and from 684 down to 472 (31 percent) at leather processing and leather manufacturing companies
Analysis conducted by Creditinfo revealed the revenue of textile manufacturing companies shrunk by 3.1 percent (from EUR 470.4 million to 455.8 million) compared with their revenue in 2019. The same trend was observed at the cloth making companies, where the revenue dropped by 19.9 percent from EUR 457.1 million down to 365.9 million, and leather processing and leather manufacturing companies with revenue going down by 30.2 percent from EUR 23.1 million to 16.2 million.
“We noticed that small and medium sized textile companies suffered the most, while large companies still had orders to fulfil”, says the CEO of the credit bureau. “Yet it is rather likely that the further shrinking textile market this year will reduce the number of orders for the large companies, too. It means that even more employees will be forced out of their jobs in the sector”.
1/6th of Companies with High and Very High-Risk Scores
According to the credit bureau, about 17% of cloth making companies and 15% of textile manufacturers currently are ranked as high bankruptcy risk companies.
“Earlier, the textile business was growing for quite some time, and so did the creditworthiness of the companies. Currently, the risk scores of textile companies brought them in line with problem sectors such as construction and transport”, Kačinskas explains.
Moreover, experts of the credit bureau noted, that only 25 percent of the companies in the textile industry submitted their financial statements for 2020. “It seems that only companies applying for subsidies or other pandemic-related reliefs submitted their financial statements as they were required to get the subsidies”, says Kačinskas. “We call upon all companies to declare their financial situation in time, as it will enable all market players to make more objective assessment of the textile sector, and help business partners to make more accurate decisions”.
For more information, please contact:
Aurimas Kačinskas, General Manager, Creditinfo Lietuva
Email: aurimas.kacinskas@creditinfo.lt
Tel: +37061810110
