Due Diligence Risk Factors

Due diligence is a process that helps businesses make informed decisions and minimize risks. It covers financial, legal and commercial issues. Due diligence risk factors may include a company’s focus on customers, the existence of regulatory or legal disputes and the degree to which a business has created intellectual property.

One of the most important aspects of due diligence is fact verification, a thorough method of checking the authenticity of information to ensure it’s authentic and accurate. This includes checking documents, cross-checking information and confirming the identities of all parties.

A company should periodically update its due diligence on its current activities, projects, as well as business associates. The frequency of these updates will depend on the level risk of the country, project, or business partner. In regions that are at risk it is often necessary to review due diligence at least once every two years.

The enhanced due diligence (EDD), which goes beyond CDD, looks for alarms such as the presence of political-exposed people (PEPs) or a history of money laundering and corrupt practices. This could include screening against lists of PEPs from law enforcement agencies like the U.S. Federal Bureau of Investigation or the UK National Crime Agency.

EDD also requires identifying the nature of the relationship as well as any involvement from a third party for example, a provider that has contact with customers in a specific jurisdiction would have https://getvdrtips.net/a-comprehensive-guide-to-selecting-the-perfect-boardroom-software/ to be scrutinized more rigorously than an employee of a client firm. In addition, businesses should regularly review the results of their own due diligence and take action if this suggests that they face new or greater risks.

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