31 Days to a More Effective Compliance Program - Levels of due diligence

Thomas Fox
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Due diligence is generally recognized in three levels, each of which is appropriate for a different level of corruption risk. The key is for you to develop a mechanism to determine the appropriate level of due diligence and then implement that going forward.

There are many different approaches to the specifics of due diligence. By laying out some of the approaches, you can craft the relevant portions into your program. The Level I, II and III See more +

Due diligence is generally recognized in three levels, each of which is appropriate for a different level of corruption risk. The key is for you to develop a mechanism to determine the appropriate level of due diligence and then implement that going forward.

There are many different approaches to the specifics of due diligence. By laying out some of the approaches, you can craft the relevant portions into your program. The Level I, II and III trichotomy appears to have the greatest favor and one that you should be able to implement in a straightforward manner. But the key is that you must assess your company’s risk and then manage that risk. If you need to perform additional due diligence to answer questions or clear red flags you should do so. And do not forget to “Document, Document, and Document” all your due diligence.

Three key takeaways:

A Level I due diligence should only be used where there is a low risk of corruption.

A Level II due diligence is sufficient in a high-risk jurisdiction if there are no red flags to clear.

Level III due diligence is deep dive, boots on the ground investigation. See less -

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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