Due diligence is one of the most essential elements of a comprehensive compliance strategy that protects organizations from the devastating effects of financial fraud. However, it’s not without dangers, particularly in regions like Latin America, where unique dynamical circumstances demand specialized strategies.
To mitigate these risks To reduce the risk, it is vital to be aware of changes in the environment that could impact an organisation’s due diligence process. These factors could include changes in local regulations, economic trends, or geopolitical events. These factors can help you ensure that your due-diligence processes are current.
For instance when a risk assessment indicates that a person is a politically exposed person (PEP) You may have to perform more due diligence on them. This typically entails verifying additional documentation and methods to establish the source of their wealth and money, finding their ultimate beneficial owners (UBO) and analyzing their transactions to determine the possibility of money laundering or other illicit activities.
Based on the degree of risk, you may also want to perform detailed checks on their current business operations. This includes the nature and type of any third-party relationship. You may also want to review contractual obligations in order to determine if they pose a risk of not being in compliance. In addition, you may consider involving an expert third-party due to diligence service to aid your own review procedures. These services typically provide access to more extensive databases as well as the expertise needed to conduct a thorough risk assessment.