Due diligence is a critical component of a comprehensive compliance program that safeguards businesses from the devastating effects of financial crime. However, it’s not without risks, especially in regions like Latin America, where unique circumstances require specialized strategies.
To mitigate these risks, it’s essential to be aware of ever-changing factors that could impact the due diligence process of an organization. These factors could include changes in local regulations, economic trends or geopolitical events. These factors can aid in ensuring that your due-diligence procedures are up to date.
If, for example, you identify an individual as a PEP (politically exposed person) then it might be necessary to perform more due diligence. This usually means reviewing additional documentation and verification methods to establish the source of their wealth and assets and finding their ultimate beneficial owners (UBO) and analyzing their patterns of transactions to spot possible money laundering and other illegal activities.
Based on the degree of risk, you may also want to conduct detailed examinations of their current business operations. This includes the type and nature of any third-party relationship. It is also possible to look over contractual commitments to determine if they pose the risk of non-compliance. You might also consider engaging an outside due diligence expert to aid in your review process. These services often offer access to more comprehensive databases and expertise in conducting a thorough risk assessment.