International Financial Due Diligence
Financial due diligence should be viewed not only as a means to mitigate risks associated with new and existing clients, but also as an opportunity to better Know Your Customers, in order to more effectively meet their needs. Financial Due Diligence involves many aspects and it requires a host of procedures including identity verification, identification of known associates, business partners and other significant relationships, verification of sources of funds, and answering subpoenas with minimum disruptions to the organization.
Now more than ever, business relationships require the exercise of due diligence in an environment where you often understand neither the language, nor the culture, nor the laws and regulations, nor the financial practices within a given locale. And Internet searches often cannot yield enough information to address the needs or concerns that this process requires.
Because of our unique experience, LUBRINCO is particularly well equipped to help reduce loss from fraud, and liability resulting from failure to exercise appropriate financial due diligence in China, Central and Eastern Europe, Central Asia, the offshore financial centers, and Latin America.
Financial due diligence is what must be done to protect against loss, as well as from civil suits for negligent actions. Financial due diligence is the verification of representations and claims made by one party to another in an economic transaction. It is not only a process to gather, check, discover, and verify information provided, but it is also a process to identify unforeseen risk as well. This requires the experience and judgment to know when, where, and how to further to uncover what hasn't been disclosed.
International due diligence is particularly important in business transactions involving emerging markets since there is a much higher risk of misrepresentation, fraud, corruption, and criminal activity.
Additionally, there is a tendency for some organizations to review and place trust in accounting or other furnished records, without physically examining either the actual facilities or the political, corporate, and economic relationships of the owners, principals, or counterparties to the transaction. The reality is that business practices, legal procedures, and infrastructure are still in transition in many areas, with many pitfalls and problems associated with less-developed economies. And, even in working within established markets, a number of factors require that additional due diligence be performed when transactions and relationships span borders and continents.
In addition to investigations and other search techniques, effective due diligence also requires better management of and greater access to customer information within the enterprise. We understand the needs in balancing data privacy issues and business process improvements concerning how information is gathered, stored, and utilized.
Financial due diligence is not a pass-or-fail process, nor is it always facilitated by a quick search on the internet. It calls for experience and judgment to know when to explore further, as well how and where.
The LUBRINCO Group has worked to develop the same strong investigative capabilities in Central and Eastern Europe, Japan, China, Latin America, and the offshore financial centers that we have in North America. Our staff is equally knowledgeable about both the needs and customs within local regions as they are with understanding domestic needs and business practices in North America. This helps reduce loss from misrepresentation and fraud, and liability from failure to exercise appropriate financial due diligence in these environments.
Services include:
- Senior executive and key employee background investigations
- Asset verification
- Location of missing or concealed assets
- Enhanced due diligence
- Local expertise and subject matter expertise - multiple jurisdictions
- Business entity verifications, wherever they may be
The LUBRINCO Group can also help you with strategic partner location, a process sometimes called reverse due diligence. We can work with you, using the same tools and skills used in conventional due diligence investigations, to help you isolate countries and companies which meet your needs as strategic partners; help you qualify them; and help you negotiate through the final signing of the contract.
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