Due Diligence Service Due Diligence Service | Page 4

Customer Due Diligence is one of the most sensitive and highly important services. In many countries,
companies are bound by the law to conduct it. This service is necessary to avoid money laundering and
terrorist financing. In case, if the companies do not follow all the measures of it, they may be declared
non-compliant, and penalties could be charged.
The level of diligence differs as per the nature of a business, and the business relationship the company
is going to have with the client. Companies apply a risk-based approach to it and carry out enhanced Due
Diligence for customers in the high-risk category.
Vendor Due Diligence
Vendor Due Diligence is aimed at gaining a reasonable confidence that the vendor is financially capable,
and its corporate governance processes are sound. Businesses perform vendor Due Diligence before
entering into an agreement or contract with them. This agreement could be for the supply of raw
materials, information technology, or the provision of services. It helps in minimizing compliance risk
and reputation risk.
It’s is an ongoing process. Companies need to analyze their relationship with the vendors at least yearly
to know about the structural changes that might have happened at the vendor’s end. It helps one in
structuring a better deal and saving oneself from unwarranted risks.
Third-Party Due Diligence
The third-party Due diligence service is introduced due to the development of strict anti-bribery laws.
The company needs to provide proof that they have taken enough and efficient anti-bribery measures.
It is conducted when a company plans to outsource its work to external companies. The Due diligence
process helps to identify the risks involved and the chances of corruption. It is done by collecting
essential data such as company structure, reputation, operational info, and ownership.
It helps in ensuring that the third-parties employ ethical business practices, have proper policies, and
procedures in place to protect confidential information, mitigate risks, and have the proper
infrastructure to provide a sustained service.