International Business Partner Due Diligence
How much is enough?
While the need for conducting due diligence on international business partners is clear, there is no regulatory guidance specifying a minimum level to be conducted. This ambiguity can make it tempting for companies to take a cursory swipe at due diligence. But as evidenced by SEC and DOJ judgments, in which U.S. companies have been fined for not performing sufficient due diligence, this approach will no longer suffice.
Increasingly, companies will be expected to conduct a deeper, more systematic investigation of potential international business partners that involves collecting information from the business partner, verifying the data and following up on identified “red flags.” Failing to do so can have considerable negative financial and operational repercussions for companies conducting business internationally.
The attached report reviews regulatory guidance on the sufficiency of background research, explores options for information-gathering, and examines factors to consider in the due diligence process.
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