Umazi’s Not-So-Secret Weapon for Fighting Illegal Transactions

Oct 2022
Posted by -
Patrick Boscher
Read time -
~3 min

If you read our last blog, you’ll know we were looking at the due diligence failures that enabled North Korea to import two luxury, armoured Mercedes-Maybach S600 vehicles for use by Kim Jong Un in breach of US and UN sanctions. And this is just the tip of the iceberg. North Korea is "flouting sanctions through trade in prohibited goods, with evasion techniques that are increasing in scale, scope and sophistication," according to a report prepared for the UN Security Council.

That flouting of sanctions is made easier by extensive failures in due diligence and the difficulty of real-time compliance regulation across borders and industries.  

Here we outline how Umazi’s corporate digital identity and due diligence solution could have helped prevent the cars getting to North Korea.  

1. Identification of luxury goods

In our last blog we gave the players involved in this supply chain the benefit of the doubt. Maybe the interpretation of the World Customs Organization’s Harmonized System (HS) code differed across the various jurisdictions so not everyone had the items flagged as luxury goods.  

What could Umazi have done?

Umazi connects with third party risk databases either directly or through participating parties. Therefore, Umazi could have detected that the cars were luxury goods and flagged it proactively to all parties involved in this transaction so they could have jointly started working on enhanced due diligence.

Alternatively, if one party had missed that this transaction involved luxury goods, a flag with “luxury goods” during the due diligence of another party would have notified all the other parties involved about it.

2. Enhanced due diligence on involved parties

It seems that the parties involved in this transaction, which included the consignor, consignee, carrier, shipping company, ship owner, various brokers, insurers, reinsurers and other financial institutions, took what might be described as a light touch approach to due diligence. Had they carried out robust investigations and been able to share validated documents among all parties involved, they would have realized something was wrong.

What could Umazi have done?

Umazi creates virtual identities of all parties involved in a transaction, even though they might not be using the platform themselves. It connects to data provided by the parties involved in the transaction, and other commercial and open-source third-party databases. It would visually provide a picture of the location of Zuisyo Co., Ltd. and the data provided in the corporate registry, which would have raised red flags during the diligence process.

A due diligence assessment of this company could later be reused for further business transactions. Even though this company might not be sanctioned, it will still appear as high risk in Umazi with a reference to previous assessments.

Umazi enables you to risk assess your corporate and institutional business relationships leveraging previously completed AML and due diligence assessments while creating a network of trusted corporate identity data.

3. The power of joined-up due diligence

Isolated and insufficient compliance processes resulted in laws and regulations being circumvented allowing Kin Jong Un to get his cars.

In the future, to avoid such illicit activities in global trade and proactively support national and international policies, joint due diligence effort in the corporate and transportation sector will be required.

Umazi is designed to connect separated and isolated compliance activities, transforming individual effort into robust, joint due diligence. Our blockchain-based platform ensures that data is tamper proof and cryptographically secured.

Book a demo to find out more about how Umazi can give you peace of mind when working across international borders and industries.

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