Due diligence is an important compliance process. It protects against financial crimes, such as money laundering and terrorist financing. Due diligence requirements are growing and it is crucial that companies develop strategies that are adapted to the specific needs of each region, while adhering to international best practices.

Although it might seem like difficult and http://www.getvdrtips.net/angel-investor-due-diligence-checklist time-consuming conducting due diligence is essential to the success of any business. The process is usually split into two major areas: the purchase or sale of services and goods, and mergers and acquisitions. In both instances due diligence is conducted to ensure that businesses have all the necessary information prior to committing to a transaction.

Businesses must check the background of the company, its reputation, and affiliations of third-party organizations. This can be done via the use of a search engine or questionnaires as well as verification using independent sources like business registers or watch list databases. A thorough examination of the structure of management is also vital. It is important to know the ownership percentages of senior executives and founders. Additionally consider whether they have recently sold shares.

KYC/Know Your Customer checks are more specific for high-risk customers as required by anti-money laundering laws and counter-terrorism financing rules. This is often dependent on factors like the jurisdiction they operate in, the type of transactions they carry out and the source of funds for the transactions. A thorough examination of AML policies and local market reputations via media sources can also assist in the development of risk assessments.