Identifying the presence of red-flags enables investors and senior management to be better informed to respond to the risk of fraud, bribery or other impropriety; which might otherwise impact an investment portfolio, business relationship, stakeholder confidence or business reputation.
Enhanced Due Diligence to manage client risk
Pre-employment & key-person risk assessment
Bribery and tax evasion risk-assessment
Firms covered by the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ('MLR'), are obliged to apply enhanced customer due diligence in specific situations, including (but not limited to): when a customer or the beneficial owner of a customer is — (a) a politically exposed person (a 'PEP'); or (b) a family member or a known close associate of a PEP.
Effective due diligence procedures aid bribery risk assessment and mitigation. Due diligence of specific prospective third party intermediaries could aid mitigate bribery risk. The significance of due diligence justifies its inclusion in anti-bribery guidance published by the Ministry of Justice (i.e. procedures organisations can put into place to prevent persons associated with them from bribing).
The Government considers that prevention procedures put in place by relevant bodies to prevent tax evasion from being committed on their behalf should be informed by six principles. Principle 4 is: "The organisation applies due diligence procedures, taking an appropriate and risk based approach, in respect of persons who perform or will perform services on behalf of the organisation, in order to mitigate identified risks."