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Build a robust due diligence process

July 31st, 2014 - Posted by Mark Dunn in Anti-Bribery And Corruption

diligence banner 1Third party due diligence hasn't always been amongst the first priorities considered by businesses implementing 'adequate procedures' to tackle bribery & corruption. As a consequence many organisations struggle to put in place effective and proportionate due diligence processes aligned to their markets. However, the increase in regulatory scrutiny of ABC procedures; the expectations from US agencies that "Comprehensive due diligence demonstrates a genuine commitment to uncovering and preventing FCPA violations"; and from the UK Ministry of Justice that "the commercial organisation applies due diligence procedures" means this task is getting more attention.

These issues were touched on at the C5 Anti-Corruption Event in June where LexisNexis Business Information Solution's Due Diligence Segment Leader, Mark Dunn, hosted a workshop entitled 'Implementing Compliance Procedures in Your Joint Venture Partners and Subsidiaries'. The event brought together anti-corruption professionals including; senior officials from government, international financial institutions and NGOS; as well as in-house business leaders, counsel, ethics and compliance executives, and internal auditors from around the globe to network and discuss issues around bribery, corruption and compliance.

The outcomes of the workshop have been described in our free white paper 'Implementing a consistent and efficient third party due diligence process'. And, for a quick overview, here are Mark's 8 top tips.

8 key points to consider

  1. Implement criteria to help assess red flags and define the point at which the business may walk away from an opportunity, backed by a clear audit trail reflecting the decisions taken and why.
  2. Take a risk based approach to due diligence. Know when to investigate further and assess whether a potential red flag is an isolated issue or a systemic problem within the third party.
  3. Know when to escalate due diligence and deploy more specialist advisors backed by a tailored consulting agreement.
  4. Set out a communications process to ensure Compliance is able to apply clear and consistent procedures when escalating potential issues to senior management or seeking further approval.
  5. Make sure everyone (staff and third parties) are aware of the consequences of non-compliance, both personally as well as for the business.
  6. Be aware of local legislation and any inherent nuances or interpretations in local law.
  7. Even if there is no perceived risk from breaching high profile, extraterritorial UK or US anti-bribery legislation, is there still a danger of damaging the company's reputation or curtailing future projects in other markets?
  8. Ensure ABC policies and procedures, the tone from the top and staff training correctly message the dangers of letting what may be perceived as the obvious commercial benefits of a significant business opportunity outweigh the regulatory and reputational risks to the business.

End notes

Better understand your customers, employees and vendors to reduce risk, raise productivity, increase profitability and improve decision-making. Lexis Diligence brings together all the intelligence you need in one place to conduct consistent due diligence and comply with anti-money laundering and anti-bribery regulatory requirements. It's fast, intuitive and doesn't require any additional IT investment or training.

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