More and more companies are understanding the federal anticorruption, Patriot Act, and export due diligence requirements to “know your customer”. However, I am asked over and over how much information is really needed. Do you really need to know if your foreign partner makes political party contributions? Must each foreign person list every relative that works in the foreign government on the compliance questionnaire? If it is an export transaction and you are a supplier to prime contractor, can you ask your customer who it is selling to, where is the ultimate destination and who is the end user?
The answer is the more information you have the better you protect your company and yourself. You really do need the information to understand the risks. So it is a business decision to balance your diligence obligations with your customers and partners tolerance. Here are some options to consider:
Start with your generic due diligence questionnaire. Explain that you must have this information to comply with US law, specifically your due diligence documentation requirements.
Explain the questions are standard and do not imply that the company or person has done anything improper.
Revise the questionnaire to be more generic to avoid the time consuming questions initially. For example, “have you or any close family member held a government position” rather than “list all family members with government positions”. You can follow up with a supplemental questionnaire as needed.
Explain that you will not share this information and it will be maintained in confidence by your compliance officer.
And finally, explain that your lawyers require the information for you to proceed.
Have a great day,