Latin America Due Diligence Risk Factors

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Due diligence is one of the most critical components of a comprehensive compliance plan safeguarding businesses from the devastating effects of financial crimes. It’s not without risks particularly in regions like Latin America where unique dynamics require specialized strategies.

To mitigate these risks, it’s essential to keep track of the changes in the environment that could impact an organisation’s due diligence process. These could include changes in local regulations, economic trends, or geopolitical events. These factors will assist you in ensuring that your due diligence procedures are up-to-date.

For example in the event that a risk assessment indicates that a person is a politically vulnerable person (PEP) then you might need to carry out enhanced due diligence on them. This usually involves checking additional documentation and verification methods to determine the source of their wealth and assets, in determining their ultimate beneficial owners (UBO) and analysing their transaction patterns to identify the possibility of money laundering or other illegal activities.

Depending on the level of risk, you may also want to conduct detailed assessments of their current business operations, including the type and nature of any third-party partnerships. This might include examining contractual commitments to assess whether they pose a compliance risk. Additionally, you may think about enlisting an expert third-party due diligence service to support your own review processes. These services typically provide access to more comprehensive databases and expertise in conducting an extensive risk assessment.

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