ARTICLES 

Cross-border compliance: From Europe to China

For companies looking to grow on the Chinese market, having a cross-border framework and proper KYB and KYC compliance is of utmost importance. However, it also brings with it significant challenges to overcome.

Cross-border Compliance can be Complicated

There is a growing interdependence of the world’s cultures, populations, and economies, and a steady increase in cross-border trading of technology, information, financial services and investments. With this explosive globalization comes the inescapable issue of cross-border compliance for companies and financial institutions that are servicing clients abroad. Ensuring compliance across different borders can be both costly and risky, and due to strict regulatory consequences, there is little to no margin for error.

A proper cross-border framework requires regulatory guidance, like policies and manuals, in addition to compliance training and ongoing monitoring. The pandemic also saw a shift in operations for many global players, meaning that cross-border compliance frameworks were needed to encompass both physical and digital business activities. Checking investment proposals for country-specific restrictions to sourcing compliance information that is up to date, accurate, and reliable, is a cumbersome and never-ending process.

To make matters even more complex, training and monitoring of employees is a never-ending cycle of updates, changes, and new regulations that need to be implemented. Because of this, personnel often find themselves returning to the classroom shortly after leaving it in order to stay up to date with the ongoing changes, instead of focusing on generating revenue for the company that they work for. This, when paired with the labor-heavy tasks of monitoring things like product restrictions, client meetings, and marketing campaigns, makes the thought of expanding into a market quite daunting for many firms. As a result, many organizations only ensure that they have controls in place for high-risk areas, which naturally is a calculated risk in and of itself.

There are endless amounts of cross-border compliance challenges, and this is especially true for European companies that aspire of expanding into China.

Cross-border Compliance Challenges on the Chinese market

China is obviously not the only market that comes with cross-border compliance challenges, but it is a good example to highlight as it is a quite different market from the European one.

With over 200 million entities registered on the China mainland as of January 2021, it is estimated that more than 5 million of these are shell companies with a combined generation of 2.2 million cases of illegal activity (fraud and money laundering), in addition to over 100 million court records and 6 million penalty records. This market is complex to navigate, and to avoid becoming another victim of financial crime when doing business in China, proper business verification process (KYB and KYC checks) is both critically important, and enormously challenging.

In order to retrieve the data needed to meet the regulatory requirements for a KYC/B check in China, a company needs access to several different sources and registers, including government registers. Making this even more complex is that, obviously, all the data in these registers is in Chinese.

To then extract the required data and translate it in real time to meet the high expectations of today’s digital users, is a tough nut to crack. Once the data is out, it needs to be sorted based on the required data points and then saved to be returned to, and used again for matching for continuous controls, and then continuous compliance.

Getting to grips with China’s and other new country’s data infrastructures, regulatory requirements and in languages you don’t know is not usually part of a company’s day-to-day operations. Nor is it necessary to make it so.

ZignSec, an all-in-one platform for cross-border compliance

Thankfully, managing cross-border compliance does not have to be low-tech and resource-intensive, nor does it have to come with spiraling budgets or restricted or reimagined expansion plans. A digital revolution is finally here, and new tools for cross-border compliance are an important part of this.

We aggregate the world’s best solutions for identification and compliance and offer them as a single endpoint and suite of tools for your business. Our platform makes it easy for you to replace manual and cumbersome processes with digitized and automated workflows for KYC/B & AML checks, age verification, fraud detection, and onboarding, regardless of geographical market.

One of our 100+ aggregated service providers is AsiaVerify, a market leader when it comes to verifying your business partners, customers, and employees in real-time. An expert in KYB and KYC solutions for the Asian market and China, they offer world-class automated compliance services through impeccable sources. With their sophisticated tools, you can effortlessly mitigate your business risk and meet your compliance requirements in a matter of seconds. Their instant company check connects you directly to government registries and full coverage of over 206 million companies, including all types, statuses and sizes. With access to multiple sources and registries, your business can receive combined data packages with quality data over 60 different data points, and real-time UBO searches, all automated and translated in real-time from Chinese into English.

Through the ZignSec platform you can get access to AsiaVerify’s services in combination with services for your current and other potential markets – offering full compliance, no-code management, and complete control.

Looking into new markets and need to digitize your cross-border frameworks?

Contact us today at [email protected] if your company is tired of the ancient paper-based processes and labor-intensive tasks.

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    Effective date: January 1, 2020

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