Due diligence factors are the main issues that go into the risk assessment process when conducting a due diligence examination. A wide variety of stakeholders can benefit from the process, including acquiring companies that wish to look at their target firm prior to an acquisition or merger as well as investors seeking an extensive risk assessment prior investing; and employees assessing the potential candidates for employment.
The process of due diligence can include a variety of different tests based on the intended use and scope. Common checks include identity verification, screening against sanctions lists and criminal watchlists, as also an investigation into http://www.getvdrtips.net/top-virtual-data-room-service-providers-2022 the sources of funds. A risk-based approach is required to determine if enhanced due diligence (EDD) or other measures, are needed. This is because customers that pose the highest risk of money laundering or financing terrorists need additional measures, such as more frequent monitoring of transactions and the collection of more information.
EDD can also involve analyzing the beneficial ownership of corporate customers to limit the risks of concealing ownership. This could involve examining the structure of the company and identifying connections with public officials that could lead to corruption. EDD should also conduct a regular review and update of the sanctions lists for international countries in order to ensure compliance.
A good due diligence process will provide a summary of important findings to people who don’t have time to read the full report. The summary should be brief and include the type of business due diligence conducted (e.g. an extensive risk assessment before an investment in a company); the reason for the due diligence; and any significant findings from the due diligence.