Due diligence risk factors are the primary aspects of the risk assessment which is a part of conducting a business due diligence investigation. Many stakeholders can benefit from the process, including companies that want to study their potential target prior to a merger or acquisition or investment; investors seeking an exhaustive risk assessment prior to investing; and employees looking at possible candidates for employment.
Due diligence can involve different types of checks depending on the goal and scope. Checks can include identity verification, screening of sanctions lists, criminal watchlists as well as an investigation into funds sources. Additionally, a risk-based approach must be used to determine whether enhanced due diligence (EDD) measures must be implemented. This is because customers http://www.getvdrtips.net/best-stock-news-sources-to-follow who have an increased risk of laundering or terrorist financing require additional measures, including increased monitoring of transaction patterns and the collection of more data.
EDD can include assessing beneficial ownership of corporate clients to minimize the risk of hidden ownership. The process can include examining the structure of the business and identifying any connections to public officials which could result in corruption. EDD must also conduct a regular review and update of the international sanctions lists to ensure compliance.
A good due diligence process will provide a summary of the principal findings to those who don’t have the time to read the full report. The summary should be concise and include the type of due diligence that was conducted (e.g. thorough risk assessment before an investment in an organization) and the reason behind the due diligence; and any important findings from the due diligence.
