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Doing business with foreign companies can be profitable – but there are also risks involved. Here is a list of the countries you should be particularly careful of working with.
“The common denominator is that there’s a high risk of corruption, it’s difficult to obtain full knowledge about the customer and there are major shortcomings in the authorities’ checks,” says Erica Olivius, Product Manager, Business Information at Bisnode.
High-risk countries or tax havens. This is what the 35 nations on the European Commission and G7’s Financial Action Task Forces’ blacklists are called. Iceland and Bosnia-Herzegovina are among those listed.
“No doubt some countries, such as Iceland, are upset at being on the list. But the assessment is that its financial controls fall short. However, Serbia has been removed as it has now improved,” says Olivius. “Then we have Iran and North Korea, both of which are the subject of trade sanctions. It is possible to do business in these countries but it’s very complicated.”
From these lists, Bisnode has compiled a detailed list of which Swedish companies are part of international groups that have companies based in these countries. Please contact Bisnode if you’re interested in viewing the list.
“We’ve been able to draw up our own list thanks to the excellent data sources we can link up with. This demonstrates the capacity of our systems and analyses.”
When doing business with companies that have links to, say, North Korea, the process is lengthy – especially at the bank, which is obliged, under the Anti-Money Laundering Act, to check everything (see fact box).
“A warning flag is raised in the bank’s system, which means a lengthy administrative process and a high risk of being refused any time you want to borrow money. So there’s a high risk of losing time and money, and it becomes a difficult process even to apply for a loan.”
The Anti-Money Laundering Act is based on the EU directive devised to counter money laundering and terrorist financing. The law came into force in August 2017 and has been tightened up incrementally, most recently on January 1, 2020. The law requires companies in the financial sector in particular, such as banks, to conduct even more rigorous checks on their customers than before.
If the company still wishes to trade with high-risk countries and tax havens, Olivius recommends being well prepared and having access to a system like InfoTorg or D&B (see fact box).
“Business abroad is always associated with some risk, but in these cases the risk is elevated. Therefore, it’s important to check your business partners more rigorously, ideally find out as much as possible about the company,” says Olivius. “There are great opportunities to conduct relevant searches and analyses within our systems. Verifying that the company really exists and how much it turns over is fundamental.”
The Know Your Customer (KYC) guidelines are another piece of the puzzle when it comes to trading abroad successfully. The guidelines aim to restrict money laundering and terrorist financing. “They contain a process for business operators who obey the Anti-Money Laundering Act to learn about their customers. InfoTorg enables companies to carry out checks and monitor customers. If you have the systems in place this is easy, and it contributes to transparency and safer business.”
– Sweden’s leading information portal and has been collecting useful high-quality data from over 100 sources since 1977.
– Collects, compiles and analyzes data on 9.5 million people, 8.7 million companies, 7.6 million vehicles and 3.5 million properties.
– Is supplemented with 350 million foreign companies and their group connections in the integrated Dun & Bradstreet service.
– Obtains relevant information from official sources that facilitates decision-making, avoids risks, provides new business opportunities and is compliant.
– Provides access to data relating to company information, personal information, vehicle information, property information and legal information.
– Available as an app for Apple or Android.
Ethiopia (EU & G7)
Pakistan (EU & G7)
Sri Lanka (EU & G7)
Syria (EU & G7)
Trinidad and Tobago (EU & G7)
Tunisia (EU & G7)
Yemen (EU & G7)
US Virgin Islands (EU & G7)
American Samoa (EU & G7)
Dominican Republic (EU)
Guam (EU & G7)
Marshall Islands (EU)
Samoa (EU & G7)
Trinidad and Tobago (EU & G7)
Sanctions and trade barriers:
Iran (EU & G7)
North Korea (EU & G7)