ETHIC Service by Infosecurity – Innovative Approach To Estimate Business Integrity

On June 1, 2021, the Bank of Russia published a list of about 1.8 thousand organizations and Internet projects with signs of pyramid schemes, loan sharks or professional securities market participants. Infosecurity fully supported this initiative, hoping it would protect consumers and warn of risks that might arise. For over 2.5 years, the Company's specialists using the ETHIC service have been efficiently identifying high-risk organizations before they are trapped into unlawful activity or begin to carry out suspicious activities.

Infosecurity monitored the black market of companies and revealed that more than 75 percent of organizations put up for sale on the darknet were observed in various suspicious activities within 12 months from the date of sale. The Legal Entities module, included in ETHIC service, collects data on organizations and individual entrepreneurs put up for sale illegally. The data obtained are analyzed and enriched, after which are compared with data from the Unified State Register of Legal Entities to establish complete details of the organizations sold. Based on the analysis, a single database of legal entities and individual entrepreneurs being sold or already sold in the darknet is formed. The major threat posed by such companies is that they do not officially replace the founders and CEOs, thus allowing them to undergo scoring checks smoothly due to the years of good reputation. At the same time, these organizations are already working for new, shadow owners, and participate in suspicious financial transactions.

Data provided by Legal Entities module include the name of a legal entity, tax payer number, information on availability of bank accounts and other information that uniquely identify the company and assess the risks associated with its activities. The module is currently tested and highly appreciated by a number of Russian banks: the solution provides extra protection against possible problems and protects against excessive attention from financial regulator. For example, banks can track ads on selling companies with settlement accounts in their credit institution, reconfigure financial monitoring system and stop high-risk transactions. Dozens of companies involved in unlawful schemes have already been identified. Losses averted have exceeded millions of rubles, and possible reputational damage is difficult to predict.

"The realities of our time has shown that tracking only the companies implicated in illegal or other suspicious activity is no longer sufficient. Getting ahead of this thing – that's our goal, we need to reveal downside risks and apply them when working with partners and counterparties," said Diana Selekhina, Leading Analyst in Threat Monitoring and Analysis Department.

Thus, using data of the Legal Entities module allows not only to avoid financial losses, but also to provide a qualitatively new level of due diligence. A credit and financial institution can now predict all possible negative consequences beforehand, avoid financial and reputational losses, and excessive attention of financial regulator. It is worth mentioning that up to now, none of the tools presented on the Russian market for checking counterparties does not maintain data on selling companies on the darknet. This makes the Infosecurity module unique and in-demand for any organization concerned with information security.

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June 2021

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