Latin America Due Diligence Risk Factors
Due diligence is a crucial component of a comprehensive compliance program that protects organizations from the terrible consequences of financial crimes. It’s not without risks, particularly in regions such as Latin America where unique dynamics require customized strategies.
To mitigate these risks, you must keep track of any changes in factors that could affect the due diligence of an organization. These may include changes in local regulations, economic trends or geopolitical events. Being up-to-date with these developments will ensure that your due diligence processes are up to the task.
If, for instance, you identify an individual as a PEP (politically exposed person), it may be necessary to perform enhanced due diligence. This usually involves checking further documents and confirming methods to establish their source of wealth and assets. It also includes identifying the ultimate beneficial owner (UBO) and studying their transaction patterns to identify money laundering or illegal activities.
Based on the degree of risk, you might also consider conducting thorough reviews of their current business operations. This includes the type and nature of any third-party relationship. You may also want to examine contractual obligations to determine if they are the risk of non-compliance. You may also think about engaging a third-party due diligence specialist to aid your review process. These companies typically have access to more comprehensive databases, and they can offer expertise in conducting an extensive risk assessment.