A Guide to Third Party Due Diligence

20 July 2017 Amelia Henderson Best practices

Third-party due diligence is the process a business undertakes when it is looking to outsource work to an external company, in order to understand the level of risk involved.

This type of due diligence has become increasingly important in recent years due to the introduction of strict anti-bribery legislation, which requires companies to provide evidence that they have sufficient anti-bribery measures in place.

While initial due diligence needs to be conducted before an agreement is reached, companies should continue to monitor risks on an ongoing basis as regulators will hold them accountable if new issues are not addressed swiftly.

To complete the process, businesses must create an inventory of all the third-parties they are looking to work with, and assess the corruption risk level for each. Following this, the third-party due diligence process should be initiated.

How is third-party due diligence conducted?

The first step in the process is to collect the relevant data and documentation on the structure, reputation, ownership and operations of the potential vendor.

DueDil enables users to easily understand corporate structures, by surfacing parent companies and subsidiaries, shareholders and beneficial owners, all of which is vital when assessing the risk posed by a third-party.

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Questionnaires should also be submitted to the business unit that is looking to take on a new contractor/supplier and the relevant organisations to complete. The data collected should then be analysed and verified by an independent compliance/legal department to assess the risks involved.

What are the benefits of conducting third-party due diligence?

Conducting rigorous due diligence of third-parties has several key benefits:

•It allows businesses to establish a clear picture of who they are working with in terms of business potential and risk.

•Third-parties pose a significant corruption threat. Conducting due diligence helps the company to protect itself from risks that may be involved, which may relate to operations, IT security and anti-corruption.

•Thorough evaluation of potential vendors is also key in protecting the company integrity, as it allows businesses to scrutinise their reputation and determine whether working with them would tarnish their own brand image.

•Completing a comprehensive due diligence programme ensures that the business adheres to strict regulations on mitigating exposure to risk and, preventing bribery and corruption.

•If a company fails to adhere to the UK Bribery Act and FCPA regulations and does not put measures in place to prevent bribery, they could face serious consequences including an unlimited fine, and in some cases prosecution.

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How DueDil can help

The richest source of company information

DueDil provides businesses with comprehensive information required for conducting third-party due diligence checks. This includes firmographic and financial data, ownership information including beneficial owners and shareholders, as well as the wider corporate structure.

Businesses can use this information to review third-party financials, debts and assets to develop a clear understanding the company’s background and determine the level of risk involved in working with the organisation.

Detailed credit reports provide detailed a detailed history, including benchmarks against similar companies, CCJs and Gazette notices filed against the company.

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An intuitive user interface

DueDil provides its customers with an intuitive and easy-to-navigate UI that makes it easy to access and understand our rich company data.

Business can create lists of their third-party suppliers, and monitor the companies in these lists for important changes and company events, including new credit scores, directorship changes and newly issued court judgements. Users can receive optional weekly alert emails detailing all recent changes.

Seamlessly integrate into your systems and processes

Integrating DueDil data into everyday systems and processes is simple, and there are a wealth of options for doing so. DueDil’s company data can be used to automate tasks such as web form autopopulation, credit checks and CRM cleansing.

A powerful and versatile API can be used to support a wide range of business-critical functions, including third-party due diligence checks. It is an easy to implement solutions, with little to no overheads and minimal set-up time required.

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DueDil recently launched an exciting new service in conjunction with Callcredit, enabling users to conduct both KYC and KYB checks through a single unified platform.