Due diligence is used for confirming the material facts accompanying a sale. It is in its nature an audit or an investigation of a potential investment.
Due diligence may also be defined as the care that should be taken by the trader before entering into transaction or signing an agreement with another party.
A careful and persistent effort is also required by the financial institution in order to find information in regard to the source of wealth for the customer. There are two benefits of key importance for the financial businesses that are risk-aware- the comfort that the firm is not exposed to excessive risk such as when being used by criminals, and the thorough knowledge of the customer’s financial position and sources of wealth.
To “Know Your Customer” is a requirement for the financial institutions across the world. This rule is enforced by strict legal and regulatory requirements because of money laundering and other financial crimes.
Wrong decisions are not an option for a business while searching for types of customers. This is especially true at times of unstable economic conditions. Due diligence of good quality will ensure a source of wealth for individuals while the background and the identity of the shareholders will be known.
The financial system is often used by criminals who hide the source of wealth, gained from illegal activities. Examples are bribery, drug trafficking, embezzlement, extortion, theft, and so on. These illegal gains look genuine at the hands of criminals. The term used by financial institutions is called anti-money laundering while speaking of combating this illegal activity. It describes a variety of measures used by the institutions for stopping criminals from exploiting the financial system.
The successful identification and prevention of money laundering will be determined by the quality of the customer’s due diligence.
Free charting webinar
Mon, Nov 18th, 2013 12:00 PM - 1:00 PM EST
During the 60 minute session Paul Coghlan, founder of Coghlan Capital, looks at current charts for currencies, precious metals, US indices, highlighting turns and low risk entry points using the Median line analysis methodology.
Median line analysis reduces risk and increases the chartists ability to see trend direction, trend strength and highlight entry and exit levels.
Seats are limited so be sure to reserve your spot today. The webinar will be recorded, by signing up you'll receive an email with the webinar replay afterwards.