Due diligence issues are the main issues that go into the risk assessment process used for conducting a due diligence examination. A wide variety of stakeholders can benefit from this process, such as companies that wish to look at the target company prior to an acquisition or merger as well as investors seeking an extensive risk assessment prior investing; and employees evaluating possible candidates for employment.

The process of due diligence can include a variety of different checks depending on the purpose and scope. The checks include identity verification, screening of sanctions lists, criminal watchlists, as well as an investigation into funds the source. A risk-based approach is also required to determine if enhanced due diligence (EDD) or other measures, are needed. Customers who are more at risk of financial crime and money laundering will require additional measures such as more frequent monitoring of transaction patterns and obtaining more information.

EDD can also involve analyzing the beneficial ownership of corporate clients to minimize the risk of hidden ownership. This process can also include reviewing the structure of the company’s business operations and identifying any possible relationships with public officials which could lead to bribery or other corruption crimes. Additionally, it is vital that EDD includes periodic reviews of the sanctions lists for international countries to ensure compliance with the regulations.

A thorough due diligence process will provide a summary of the most important findings for those who don’t have the time to read the entire report. The summary should be brief and include the kind of due diligence that was conducted (e.g. a comprehensive risk analysis before investing in a company) and the reason behind the diligence, and any important findings.

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