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Moody's (MCO) to Enhance KYC Capabilities With 2 More Buyouts

To further strengthen KYC capabilities, Moody's (MCO) announces two more deals. These will likely help the company address compliance-related challenges on real-time basis.

This story originally appeared on Zacks

After acquiring Bogard AB last month, Moody’s MCO has announced two more deals that will further strengthen its Know Your Customer (KYC) capabilities. The company has acquired PassFort Limited and inked a deal to buy 360kompany AG.

These two firms are providers of onboarding and KYC technology solutions. The buyouts are expected to further support Moody’s technology, data and analytical capabilities. Also, these are likely to augment the company’s “industry-leading customer solutions for KYC, anti-money laundering, compliance, and counterparty risk” and are part of an effort to fortify Moody’s Analytics (“MA”) division’s profitability.

Keith Berry, General Manager of Moody’s KYC business, said, “PassFort and kompany are innovators in the compliance and regulatory space, and their technologies will upgrade and accelerate our customers’ onboarding and monitoring processes.”

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The U.K.-based PassFort is a SaaS-based workflow platform for identity verification, customer onboarding and risk analysis. The platform, deriving data from 25 third-party providers, systematizes the collection, verification, and secures the storage of customer and supplier due diligence documentation.

The firm’s integration into Moody’s suite of KYC and compliance product offerings is expected to lead to the creation of a complete workflow solution, which will allow customers to combine Moody’s data “including credit, cyber, ESG, and climate analytics directly into their proprietary processes.”

360kompany is a Vienna, Austria-headquartered platform for audit-proof business verification and KYC. The firm operates a network of primary source information on more than 115 million companies across 200 jurisdictions. The platform will help Moody’s clients to do comprehensive shareholder analysis and entity verification in real-time. Further, it will help retrieve original company filings and documents to meet their regulatory demands.

Subject to regulatory approval, the acquisition of 360kompany will be completed in the first quarter of 2022. Unlike funding PassFort deal with cash, the buyout of 360kompany will be funded through a combination of cash and shares of Moody’s stock. These deals will have no material impact on Moody’s 2021 results.

Further, following their integration into MA division’s KYC business, both will expand “the Orbis company database and the GRID database of risk profiles, adverse news, politically exposed persons, and sanctions.”


Over the past five years, Moody’s has been enhancing its investments in compliance and KYC space. This includes the acquisitions of Bureau van Dijk (2017), RDC (2020), Acquire Media (2020) and Bogard (2021).

Now, through the latest two deals, Moody’s will be able to address more compliance-related challenges. Also, the deals take the company a step closer to perpetual KYC (pKYC). While the company’s existing solutions track entity risk information and emerging risks, a more all-inclusive approach is needed to deliver pKYC on a real-time basis. These are expected to be generated through the integration of PassFort and 360kompany with the MA division.

Also, such transactions are expected to keep helping the company diversify its revenues and be accretive to earnings. Moody's will continue to pursue opportunistic deals that are strategic fits and complement its existing operations.

Shares of Moody’s have gained 32.5% so far this year, outperforming 14.2% rally of the industry.


Zacks Investment ResearchImage Source: Zacks Investment Research

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Finance Firms

Last week, Ally Financial Inc. ALLY acquired the digital-first credit card company Fair Square Financial. Earlier in October, ALLY had signed a deal to buy Fair Square for $750 million in an all-cash deal.

The transaction will advance Ally Financial's evolution as the leading digital consumer bank, providing frictionless, innovative products to its growing customer base. Further, the deal is expected to enhance the company’s ability to grow and deepen customer relationships and provide access to the $1-trillion credit card market.

Valley National Bancorp VLY has completed the previously announced merger deal with The Westchester Bank Holding Corporation. This June, VLY had entered an agreement to acquire Westchester to expand its presence.

The acquisition is expected to provide Valley National with a physical footprint and additional commercial lending expertise in the Westchester County market. With Westchester's branches, Valley National will now have 233 branches in total.

Citizens Financial Group, Inc. CFG last month concluded its previously announced merger with JMP Group LLC. CFG had announced the all-cash deal in September in a bid to augment its capital market capabilities.

The buyout is expected to foster growth, diversify Citizens Financial's capital market platform and provide greater scale in key verticals like healthcare, technology, financials and real estate.

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