Due Diligence
Nowadays, for market participants, the need to manage risks in their activities becomes obvious. The requirement of “transparency” when interacting with partners is no longer a tribute to fashion, but a norm that is relevant both for large companies leading the market and for young businesses aimed at successful development. Any company with the intention of entering into an important contract, or an investor planning to acquire a business, wants to be completely confident in the profitability and security of the future transaction. This confidence can only be based on reliable and comprehensive information about a potential counterparty. It is for the collection and analysis of such information that a special comprehensive check is carried out, which in world practice is called Due Diligence.
There are different versions of the interpretation of the term “due diligence”: “due diligence”, “careful observation”, “due diligence check”, “comprehensive study of the information provided”. All of them imply a set of actions aimed at verifying the purity of the transaction. In world practice, such verification is very widespread.
The term first appeared in 1933 in the United States in the Securities Act. Modern due diligence standards were developed in 1977 in Switzerland: several large banks signed the Swiss Banks Due Diligence agreement, which regulates a unified approach to collecting information about customers to protect their property from possible damage. Later, the principles laid down in the agreement began to be used by the consulting business to analyze the company’s activities in terms of legal, economic and financial integrity.
Finance Business Service will help you apply a risk-based approach to meet your requirements and achieve your business goals.
One of the main types of Due Diligence that our company offers to clients is KYC (Know Your Customer) Due Diligence.
KYC Due Diligence
KNOW YOUR CUSTOMER
Supervisors, regulators and governments in jurisdictions around the world are increasingly aware of the importance of adequate risk management procedures. Companies need to have a good understanding of who they are doing business with.
Rules such as the 40 recommendations published by the FATF (Financial Action Task Force) have been adopted by a number of jurisdictions, including for example the EU. In addition, individual countries such as the United Kingdom, Austria, Germany, the United States, and others have introduced primary legislation relating to both the fight against money laundering and the fight against terrorist financing.
While the rules are primarily relevant to companies in the financial services sector, they also provide an excellent foundation for other companies (operating in less regulated industries) to mitigate risk.
One of the main principles of the KYC process is a risk-based approach. This means taking appropriate and proportionate measures to avoid interacting with clients that could be related to money laundering or terrorist financing.
Key steps in the customer due diligence process:
Finance Business Service provides its clients with the following solutions:
KYC – Basic Analysis
This package of services is designed specifically for companies that have a large number of new potential customers. In order to establish business relationships with these clients in a fast, efficient and cost-effective manner, Finance Business Service conducts a due diligence process for you, which in most cases fully satisfies the requirements of most regulatory bodies:
KYC – Deep Analysis
An in-depth KYC analysis is carried out in cases where there is a higher risk associated with a particular client, or, for example, when searching databases, sanctions lists, etc. there are matches and other risk indicators (red flags). The purpose of the extended due diligence is to obtain additional information on any match issues, as well as to expand the list of sources for analysis and detailed research.
Finance Business Service analysts prepare sophisticated Due Diligence reports that include multilingual studies using public sources, document searches, and analysis of public and signed databases.
Finance Business Service Compliance reports replace or supplement automatic checks through signed databases often used for faster screening. They remain fast, but much more accurate and detailed than the automated checks.
Our Compliance team regularly conducts third party due diligence and produces compliance reports that cover business integrity aspects of businesses and individuals around the world, helping clients monitor their counterparty compliance and adhere to third party due diligence policies.
