Due diligence risk factors are the main factors that goes into the process of conducting a due diligence exam. A wide variety of stakeholders can benefit from the process, such as companies looking to examine the target company prior to a merger or acquisition and investors who want an extensive risk assessment prior investing; and employees who are evaluating possible candidates for employment.

Due diligence may involve a range virtual data rooms of different checks depending on the intended purpose and scope. Checks can include identity verification, screening of sanctions lists, criminal watchlists, as well as an investigation into the funds origin. In addition an approach based on risk must be used to determine whether enhanced due diligence (EDD) measures need to be applied. This is because customers that pose the highest risk of money laundering or financing terrorists require additional measures, like more frequent monitoring of transactions and the collection of more information.

EDD can also include assessing the beneficial ownership of corporate customers in order to reduce the risks of concealing ownership. The process could also involve looking at the structure of the company’s business operations and identifying any relationships with public officials that could lead to bribery and other corruption offences. EDD should also be able to conduct regular reviews and updating of the sanctions lists for international countries to ensure compliance.

A successful due diligence process will provide a concise summary of key findings for those who don’t have the time to read a full report. The summary should be concise and include the type of due diligence that was carried out (e.g. a comprehensive risk analysis before investing in a company) as well as the rationale behind the due diligence, as well as any significant findings.