Secure Contracting and Due Diligence

Advanced Due Diligence Processes


When facing unpredictable, international third party business dealings, it's essential to have an effective strategy with various techniques for assessing and observing potential risks concerning your business. This guide acts as an advanced template for due diligence, which you can apply to your business at any time, to avoid financial fraud and reputation harm.

Understanding the compliance

The idea of global business today subject companies to many guidelines and a more prominent need to moderate risk through accomplices, and outside parties, to comply with the highest global security standards.

Corporate objectives for due diligence

The due diligence process needs to line up with the key, monetary, administrative, and reputational risks your company may confront. This is particularly valid for companies working with various third parties in specific countries that draw in significant levels of regulatory issues.

Collecting the key information

Important fundamental data gathering for a corporate includes:

Incorporation documentation
Information on investors, shareholders and owners
Company's members
Political associations
Official references

Important fundamental data gathering for an individual includes:

Identity proof
Source of funds
Potential political connections

Screening prospective parties

When an essential degree of checking has occurred on the third parties, both companies from the buying side and seller side should be exposed to a watchlist screening process. By doing a watchlist, in the early stages, companies can quickly determine whether the involved parties are carrying any risks, especially with the politically exposed people (PEP). Names of companies and people involved in the business deals should be checked against:

International sanction lists
International criminal lists
Regulatory lists
PEP lists

Risk Assessment

When the fundamental information is collected and screened has been done, complete a risk assessment.

Consider the following:

Risk countries which are identified in a global index of high corruption
Special government sectors might increase corruption and bribery risks
Certain entity risks such as involving third parties and getting exposed to money laundering
Fundamental factors such as lack of employee training and company culture

Verifying the information

After the completion of the risk assessment, the next step is to verify the information that has been collected. This last screening includes verifying information against open records, a credit check, particular databases like CIFAS, and documented reports and records. For enhanced due diligence, additional negative news checks from media archives and legal databases should also be taken into consideration.

Auditing the process

During the entire due diligence process, the company needs to manage an extensive record of significant reports and documents, appraisals and choices to guarantee the ROI and demonstrate that choices to draw in with accomplices or third parties were made in compliance with common decency.

Continue to monitor

After checking the third parties, despite everything, the requirement is to keep monitoring the relationship for awareness purposes of potential issues that can put a business at risk.

Regularly review due diligence processes

As businesses change and innovate, remember to focus on reviewing existing structures and ensuring that due diligence processes are constantly lined up within the company's guidelines and requirements.