Due diligence – more than a Box-ticking exercise

…One of the messages delivered at Corporate Risk Solutions’ Breakfast Briefing on Enhanced Due Diligence (EDD).

Darren Wadley, Managing Director of CRS, presented to an audience of around 50 local finance sector professionals at the event held on 15 August.

Mr Wadley outlined some of the key criteria that may place a potential business relationship into the “high risk” category and therefore require an EDD level approach. High risk could relate to a number of factors ranging from a client’s country of residence, to the nature of proposed business and type of requested structure.

Drawing on real examples in the course of his work carrying out EDD on behalf of his own clients, Mr Wadley outlined the pitfalls and complexities involved in establishing sufficient information on a new client before entering into a business relationship.

“There are many situations where standard Due Diligence procedures just don’t cut it,” he explained.

“It’s a question of carrying out far more in-depth checks, re-validating information at every stage and using multiple sources to do so – particularly if you are dealing with a country with a dubious record in terms of corruption. Companies also have to think about what they are seeking to achieve – in other words is the information they are collating fit for purpose?”

Mr Wadley stressed that finance organisations should become fully au fait with an individual’s personal and business relationships, and those of his family and associates and that the client take-on process should be used as a means to ask sometimes awkward questions in order to mitigate risk and to comply with regulatory requirements.

“The process can be complicated and pretty time consuming,” he added.

“As well as checks on the individual, you have to be wholly aware of his business activities, associates, source of wealth and funds - in these high risk situations organisations really need to dig beneath the surface. And it doesn’t stop once the client is on board. These cases should be monitored and reviewed more regularly than the standard client”.

Corporate Risk Solutions is a leading local provider of risk management services and offers two levels of EDD report as well as monitoring services.

The next CRS Breakfast Briefing will take place in September and again will be offered free of charge.

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