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Regulators are sharpening their focus on global supply chains, and businesses are feeling the pressure. Whether it is the US citing national security concerns or the EU tightening ESG disclosure requirements, companies are expected to know who they do business with, and who those third parties in turn are connected to. This heightened scrutiny has turned transparency from a compliance box tick to a strategic necessity.
Tensions between global trading blocs compound the challenges. Shifting tariffs and geopolitical friction fragment supply routes and introduce new legal obligations. For business leaders, that often translates into more red tape and rising costs. But these regulatory demands also mark a long overdue correction. The complexity of modern supply chains, with multiple tiers, intermediaries, and opaque ownership structures, has long created a blind spot for illicit activity. Greater transparency is not only a regulatory imperative, but a competitive advantage.
Outdated tools increase risks
The traditional methods of managing third party risk, database screening, and manual web searches are not fit for purpose. These tools were built in a different era. Screening databases, adopted widely after the introduction of the USA PATRIOT Act and the EU’ s Third Money Laundering Directive, were once considered advanced. Today, they are static, one dimensional, and increasingly prone to circumvention.
A key flaw in these databases is the‘ right to removal.’ High risk individuals and entities can petition for delisting, effectively erasing digital red flags. Meanwhile, smaller or shell companies in jurisdictions with limited corporate transparency slip through the cracks. Manual open-source intelligence, while richer in context, does not scale. As the number of entities businesses interact with grows, the ability of compliance teams to conduct meaningful due diligence is overstretched.
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