A due diligence checklist provides lawyers with a framework to collect, understand and evaluating the information they receive in simple or complicated legal processes. A due diligence checklist is useful for M&A activities as well as vendor onboarding or due diligence of customers to aid in anti-money laundering compliance (AML) and Know-Your-Customer (KYC). It can boost efficiency, offer a better client service, and ensure that important information is not misplaced.
A due diligence checklist that is successful will focus on the key aspects of a transaction as well as the documents relevant to each one. This allows the reader of the due diligence checklists to pinpoint any potential legal issues that may arise from the purchase or merger and determine whether the deal is worth it.
The due diligence process must include a review of contracts, intellectual property and compliance with laws. It should also consist of a thorough examination of the financial stability and capacity of the vendor. This includes checking statements and credit reports and assessing their company’s capabilities and capacity. A due diligence checklist for a company should also examine the manner in which employees are treated. This includes examining pay, benefits, vacation time accrued or given and determining whether the company complies to environmental standards.
Due diligence should also include screening third parties against lists of law enforcement agencies such as Interpol or the FBI or the National Crime Agency of the UK and all countries that are associated with them for signs of money laundering, terrorist criminality, or corruption. This is especially important when dealing with high net worth individuals, also referred to as PEPs. Along with reviewing documentation an exhaustive due diligence should also include interviews with key stakeholders and suppliers to better understand the culture of the company and the challenges facing it.
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