Due diligence is an important process that allows businesses to make informed decisions and reduce the risk. It covers financial, commercial and legal issues. Due diligence risk factors could be a result of a company’s client concentration or the existence of legal or regulatory disputes and the degree to which a company has developed intellectual property.

Fact verification is an essential component of due care. It’s a method of analyzing information http://www.getvdrtips.net/angel-investor-due-diligence-checklist thoroughly to ensure that it is true and authentic. This involves checking documents, cross-checking data and verifying the identities of individuals.

A company should regularly update its due diligence on current activities, projects, and business partners. The frequency of these updates varies on the level risk of the country, project or business associate. In regions that are at risk it is possible to review due diligence at least every two years.

Enhanced due diligence (EDD) goes beyond the standard CDD and identifies red flags such as the presence of politically exposed people (PEPs) or a history of corruption or money laundering. This could involve screening against lists of PEPs from law enforcement agencies, such as the U.S. Federal Bureau of Investigation and the UK National Crime Agency.

EDD also involves determining the scope of the relationship and any involvement of a third party, for example a supplier that interacts with customers in a specific jurisdiction would have to be examined more closely than an employee of a client company. In addition, companies should regularly review the results of their own due diligence and take action when this suggests they are faced with new or greater risks.