Due diligence risk factors are the primary concerns behind the risk assessment that goes into the process of conducting a due diligence examination. A variety of stakeholders can benefit from the process, including acquiring companies that want to study their target firm prior to a merger or acquisition and investors who want https://getvdrtips.net/how-does-an-organized-data-room-index-contribute-to-effective-document-structuring-and-accessibility-within-virtual-data-rooms/ an extensive risk assessment prior investing; and employees looking at potential employment candidates.
The process of due diligence can involve a number of different checks depending on the intended purpose and scope. Checks include identity verification, screening of sanctions lists and criminal watchlists, and an investigation into funds the source. In addition an approach based on risk must be employed to determine if enhanced due diligence (EDD) measures must be implemented. This is because customers who have greater risk of laundering or financing terrorists require additional measures, including more frequent monitoring of transactions and the gathering of more data.
EDD can include assessing beneficial ownership of corporate clients in order to limit the risks associated with hidden ownership. The process may include looking at the structure of the company and identifying any possible connections with public officials that could result in bribery. EDD should also conduct a regular review and update of the list of sanctions to ensure compliance.
A successful due diligence process should provide a clear summary of the key findings for those who do not have the time to read an entire report. The summary should be concise and should contain the type of due diligence that was conducted (e.g. the complete risk assessment prior deciding to invest in the company) as well as the rationale behind the due diligence; and any significant results from the due diligence.