Business relationships with third parties also regularly give rise to risks. This is completely independent of whether they are customers, suppliers, service providers, subcontractors, sales agents, brokers, franchisees or other business partners. The need to counter these risks appropriately arises from a number of requirements. These include, among others:

ESG requirements (e.g. the Corporate Sustainability Reporting Directive (CSRD) and ESG ratings)
Supply Chain Due Diligence Act
Anti-corruption laws (e.g. the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act)
Money Laundering Act, Banking Act (e.g. prevention of money laundering and terrorist financing including Know Your Customer)
Foreign trade law (e.g. national and international sanctions regimes)
EU General Data Protection Regulation (GDPR)
Information security requirements (e.g. the IT Security Act, KRITIS)

Monitor complex structures efficiently and avoid liability

Compliance with these regulatory requirements is challenging in many respects. On the one hand, the legal framework is subject to constant change. On the other hand, national projects often run parallel to supranational legislative processes, for example at European level. Companies with third-party relationships must always keep an eye on these developments and the resulting requirements.

In addition, companies are confronted with increasingly complex networks and structures in relation to their supply chains, subcontractors and other third parties. Interdependencies between these third parties and other companies and individuals are not readily recognisable. Contacts with political decision-makers, information on ongoing legal disputes and critical press coverage must also be monitored, as compliance-relevant risks can result from all of these interconnections and third-party relationships.

If breaches occur in this context or business relationships with questionable third parties become known, companies and their decision-makers are exposed to considerable financial and reputational risks. A holistic approach is required to manage these risks.

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Our solution: Der KPMG Integrity Screening Service

Has your supplier been criticised for environmental violations? A customer is suddenly on a sanctions list and can no longer be supplied? A service provider is sued abroad for labour protection-related misconduct?

With the KPMG Integrity Screening Service, you can recognise reputational and ESG-relevant issues at an early stage. The entire life cycle of the business relationship with your third parties is covered and continuous monitoring is made possible - 24 hours a day, 365 days a year.

The KPMG Integrity Screening Service offers the following options:

Initial screening during onboarding: retrospective examination of relevant issues over a period of time to be defined individually according to selected key topics
Ongoing monitoring: System-based monitoring of the previously named entities and their affiliated companies and employees with regard to negative issues (negative news/adverse media), monitoring of sanctions lists and politically exposed persons (PePs)
Event-related research: Individual background research using a combination of tool-based search algorithms and manual corporate intelligence analyses on ad hoc issues

The results are provided in a format and frequency to be agreed.

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Sources in over 85 countries and in more than 60 languages are used. These include

Media publications: Sources for news or online databases including paid content
Business registers: Sources that provide company data and basic information such as company addresses, owners, incorporation dates, etc.
Business registers: Sources that provide company data and basic information such as company addresses, owners, incorporation dates, etc.
Watchlists: Structured watch lists focussing on topics such as international sanctions, politically exposed persons, and state-owned companies
Register of persons: Sources that provide information on persons based on telephone directory entries, electoral registers, consumer credit applications, etc.
Cyber Security Score: Assessment of companies based on the cyber security situation
ESG-Rating: Ratings of recognised service providers for the evaluation and assessment of ESG-related key figures

A continuous supply of information as the basis for your decision-making

The reliable information provided enables you to make well-founded and appropriate decisions and initiate measures (dialogue, audits, remediation measures and, if necessary, termination of the business relationship). This is an essential building block for complying with internal, national and international regulations.

You also gain a knowledge advantage through the continuous monitoring of relevant risks and covert networks of your third parties. Integrity, reputational and compliance risks arising from your business relationships, transactions and business activities can thus be recognised and mitigated.

We would be happy to explain the KPMG Integrity Screening Service, a component of our ESG Integrity Portfolio, in more detail and work out a pricing model for you. Get in touch with us.