Latin America Due Diligence Risk Factors

Due diligence is a critical element of a comprehensive compliance plan that protects organizations from the terrible consequences of financial crimes. But it’s not without its risk, particularly in areas like Latin America, where unique dynamical circumstances demand specialized strategies.

To limit the risks, it’s essential to be aware of ever-changing factors that could impact the due diligence process of an organization. These factors might include changes to local regulations or economic trends, geopolitical events or even the emergence of new methods and technologies. These factors can help you ensure that your due-diligence processes are current.

If, for example you identify a person as a PEP (politically exposed person), it may be necessary to perform enhanced due diligence. This typically entails verifying additional documentation and methods to establish the source of their wealth as well as their funds as well as identifying their ultimate beneficial owners (UBO) and analysing their transaction patterns to identify potential money laundering or other illicit activities.

Depending on the level of risk, you might also consider conducting thorough checks on their current business operations. This includes the nature and type of any third-party relationship. You might also want to review contractual obligations to determine if they pose a risk of not being in compliance. It is also possible to engage a third-party due diligence expert to aid in your review process. These services often offer access to more comprehensive databases and can assist in conducting a thorough risk assessment.

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