Due Diligence Risk Factors

Due diligence elements are the underlying issues that go into the risk assessment procedure for conducting a due diligence exam. This process can be beneficial to a broad range of stakeholders, from acquiring firms looking to assess their potential buyer prior to a merger or an acquisition; investors looking for an in-depth assessment of risk prior investing; and prospective employees assessing possible employment candidates.

Due diligence may require a variety of different checks based on the intended use and the scope. Common checks include identification verification and screening against sanctions lists and criminal watchlists, as well as an investigation into the sources of funds. In addition a risk-based approach should be used to determine whether enhanced due diligence (EDD) measures should be applied. This is because customers that pose the highest risk of money laundering or terrorist financing need additional measures, for example, more frequent monitoring of transactions and the collection of more data.

EDD can include assessing beneficial ownership of corporate clients in order to reduce the risk of hidden ownership. The process could include examining the company’s structure and identifying any possible connections with public officials which could lead to bribery. EDD should also conduct a regular review and updating of the sanctions lists for international countries to ensure compliance.

A thorough due diligence process will provide a summary of principal findings to people who don’t have time to read the entire report. The summary should be brief, and should www.getvdrtips.net/angel-investor-due-diligence-checklist/ include the kind of business due diligence conducted (e.g. thorough risk assessment before an investment in a company); the reason for the due diligence; and any significant conclusions derived from the due diligence.