Due diligence is important when it comes to the commercial world. Whenever you consider new investment opportunities, due diligence is essential. Due diligence is a process of research to ensure you are aware of exactly what you are getting into before you do it.
What is a due diligence check?
Due diligence checks are extensive investigations to identify, evaluate and verify all available information on an individual or entity. These checks are considered to be vital when hiring a person or considering new commercial relationships. In plain terms, they eliminate the risks and help protect you and your business against potential involvements in bad actions and financial crimes. In some cases, enhances due diligence is needed. This includes collection further details to eliminate the risks even more when dealing with high-risk clients. They also help provide a much clearer understanding.
What are the steps to conduct a due diligence properly?
The first step includes verifying the clients’ identities. This helps mitigate the risks of financial crimes and helps avoid questionable activities. Starting the process includes asking for a name and address. Collecting more information mitigates risks further. General information that helps in this process includes:
• Name
• Address
• Date of birth
• Telephone number
• National ID number
• Identity documents
• Mobile network data
• Geolocation
• Selfie
• Live video
• Third-party account verification
Businesses themselves along with other legal entities also require verification to ensure there is legitimacy. Examples of business verification includes:
• Business registration number
• Company name
• Address
• Operational status
• Key management personnel
• Date of incorporation
The next step on the process is to assess third-party information sources. Examples of this include banks, lawyers and auditors. It is important to choose these third parties wisely as primary liability remains with you, not the third parties. The third step in the process is to secure your information. This helps to ensure information has been collected and stored securely with easy access to as and when you need it. The fourth step is to take any necessary additional measures. In other word to check if there is a need for due diligence. The final step is to ensure you’re audit ready. This helps keep historical records on hand.
Monarch Solicitors specialist Corporate Solicitors provide a tailor-made approach to your needs and give professional, practical and cost-effective advice to your intended proceedings. Please contact us by either calling 0330 127 8888 or emailing [email protected] for an initial consultation.
