
In the financial services, healthcare and other regulated sectors, the growing complexity of global supply chains and evolving regulatory requirements make vendor transparency critical. Recently, Mitsubishi UFJ Financial Group, MUFG blocked vendors that refused to disclose their subcontractors, shedding light on a significant yet often overlooked risk: fourth and fifth-party hidden subcontractors. These undisclosed partnerships create blind spots in risk management, leaving companies vulnerable to concentration risks and compliance gaps.
Subcontractor transparency is key to identifying risks like over-reliance on specific partners, ensuring regulatory compliance, and mitigating exposure to reputation impact, data breaches and other adverse events. Automation and AI offer a transformative solution, enabling enterprises to efficiently collect, validate, and normalize subcontractor and site data, allowing them to make informed decisions and maintain operational resilience.
Automating the Collection of Subcontractor and Location Information
In highly regulated industries such as financial services, there are often multiple layers of subcontractors that vendors rely on. Tracking down third-party, fourth-party, and fifth-party subcontractor information manually is both time-consuming and prone to errors. Vendors might not disclose these subcontractor relationships upfront, making it difficult for financial institutions to understand who all are involved in a vendor partnership. In addition to knowing the subcontractors, vendors must also disclose their sites and their subcontractor’s locations from which services are being provided or client confidential information or PII data is stored or being accessed from.
These undisclosed subcontractors might introduce operational, financial, or regulatory risks that remain hidden if not proactively tracked. By automating the process of collecting subcontractor data, financial institutions can significantly reduce the administrative burden. Automation tools like Enlighta can send out requests for vendor and subcontractor data, track responses, and ensure timely updates, all while Enlighta’s AI studio validates the accuracy of the information provided. This helps financial services organizations gain visibility into all layers of their vendor network and gather data consistently.

Normalizing Subcontractor Data and Understanding Concentration Risk
Subcontractor data often comes in inconsistent formats, with each vendor using their own naming conventions and structures.This creates a fragmented view of the vendor landscape, making it difficult to identify patterns or risks, such as multiple vendors relying on the same subcontractor under different names. For example one vendor may list Amazon AWS as a subcontractor and another vendor may list the subcontractor as Amazon Web Services. Concentration risk occurs when multiple vendors from your supply chain depend on the same subcontractor. If that subcontractor experiences a failure, it could impact multiple areas of your business simultaneously.
Enlighta’s automation capabilities streamline the normalization of subcontractor and location data, ensuring that information from various sources is standardized and consolidated into a unified system, regardless of how it’s received. This allows financial institutions to quickly gain a clear view of subcontractor relationships.
Enlighta’s AI can analyze these normalized datasets, identifying patterns such as multiple vendors using the same subcontractor under different names. By using AI to detect concentration risks, financial institutions can proactively monitor and address these risks before they escalate into significant disruptions.

Adverse Events Monitoring, Risk & Compliance
By continuously monitoring for adverse events, financial institutions can ensure that risks within their vendor network are managed proactively. Automated alerts can notify risk managers of emerging threats, ensuring quick decision-making and responsive action plans.
Sanctions screening is one of the critical aspects of compliance. If a subcontractor is found to be in violation of sanctions or regulations, the enterprise could face significant penalties. Automation tools like Enlighta streamline sanctions screening by automatically cross-referencing vendors and subcontractors against global watchlists, ensuring compliance across all layers of the supply chain. The platform continuously checks for compliance breaches, ensuring that all layers of the supply chain, vendors and subcontractors alike, adhere to appropriate regulations.
Data Elements Shared With Subcontractors
One of the often-overlooked risks in vendor and subcontractor management is understanding exactly what data elements are being shared. Are subcontractors accessing customer data? Financial data? Intellectual property? PII data? How are they accessing this data, and what controls are in place to ensure it remains secure?
Enlighta’s automation and AI provide organizations with a comprehensive view of what data subcontractors are accessing, while ensuring that only authorized parties have the necessary permissions. Automated workflows help track and monitor data-sharing practices, ensuring compliance with both internal policies and external regulations. This level of automation minimizes human error and ensures real-time updates on data access across the entire vendor ecosystem.

Another challenge involves understanding how subcontractors handle data, particularly in terms of where and how it is stored. Is data being transferred remotely? Are subcontractors storing sensitive financial information in jurisdictions with weak data protection laws? These are critical questions enterprises must address. Using automated workflows, vendors can be requested to provide information on subcontractor data handling practices, including whether data is remotely accessed, transferred between jurisdictions, or stored locally. By consolidating this data, enterprises can ensure that both their vendors and subcontractors comply with relevant data protection regulations.
Collecting and analyzing subcontractor data not only mitigates concentration risk but also strengthens compliance and enhances operational resilience
Reference to MUFG’s Action:
Mitsubishi UFJ Financial Group (MUFG) is one of the largest financial groups in the world, providing a wide range of financial services, including banking, investment, and asset management. Recently, MUFG has made headlines by blocking vendors that refuse to disclose their subcontractors, highlighting its commitment to enhancing vendor transparency and mitigating associated risks. This proactive measure addresses the growing complexity of vendor networks, especially in highly regulated sectors like financial services. By prioritizing subcontractor transparency, MUFG aims to protect itself from concentration risks and compliance gaps that could arise from undisclosed partnerships.
This article references information from Risk.net, which provides a detailed account of MUFG’s actions and their implications for vendor management. We do not own the information presented in that article, and for further insights, please refer to the original source here.
To learn more about how you can enhance vendor transparency with automation and overcome procurement challenges, connect with our team at Enlighta today! info@enlighta.com