Latin America Due Diligence Risk Factors

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Due diligence is a critical component of a comprehensive compliance strategy that safeguards businesses from the devastating effects of financial crime. It’s not without risk particularly in regions like Latin America where unique dynamics require customized strategies.

To reduce these risks to minimize the risks, you need to keep track of any changes in the factors which could affect the due diligence of an organization. These could include changes to local regulations and geopolitical events, economic trends or even the development of new techniques and technologies. Being up-to-date with these factors will ensure that your due diligence processes are appropriate for the task.

If, for example you identify a person as PEP (politically exposed person) then it might be necessary to conduct additional due diligence. This typically involves checking additional documents and confirming methods to establish their source of wealth and money. It also involves identifying the ultimate beneficial owner (UBO) as well as studying their transaction patterns to identify money laundering or illicit activities.

Based on the degree of risk, you might be able to conduct thorough assessments of their current operations. This covers the nature and type of any third-party relationship. It is also possible to examine contractual commitments in order to determine whether they could pose a risk of not being in compliance. Also, you might consider involving an expert third-party due diligence service to assist your own review processes. These companies typically have access to more comprehensive databases, and can provide expertise in conducting an extensive risk assessment.

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