Due diligence risk factors are the main aspects of the risk assessment that forms the basis of conducting a due diligence study. A variety of stakeholders can benefit from this process, such as companies that wish to look at their potential target prior to the merger or acquisition; investors looking for a thorough risk assessment before investing; and employees evaluating potential candidates for employment.
The process of due diligence may require a variety of different checks based on the purpose and the scope. The most common checks are identity verification, screening against sanctions lists and criminal watchlists, as well as an investigation into the source of the funds. In addition a risk-based approach should be employed to determine if enhanced due diligence (EDD) measures must be implemented. This is because customers who pose an increased risk of laundering or terrorist financing require additional measures, like an increased surveillance of transactions and the gathering of more information.
EDD can also include assessing the beneficial ownership of corporate clients in order to reduce the risk of hidden ownership. This could involve examining the company’s structure and identifying any possible connections with public officials which could result in bribery. EDD must also conduct a regular review and updating of www.getvdrtips.net/angel-investor-due-diligence-checklist/ the sanctions lists for international countries to ensure compliance.
A thorough due diligence process will provide a summary of the important findings to those who don’t have the time to read the full report. The summary should be brief, and should include the type of business due diligence performed (e.g. thorough risk assessment prior to investing in an organization) and the purpose behind the due diligence; and any important findings from the due diligence.