DUE DILIGENCE IN THE FACE OF UNCERTAINTIES
When the coronavirus began its global spread early in 2020, no one could predict its severity or how long it would last. A year later, we have largely settled into a new set of routines to cope with our changed circumstances, including adjustments to protocols for due diligence and monitoring the activity of third-party intermediaries. The question is whether truly adequate review and monitoring can be conducted from a distance. Given the current lack of or limited ability to conduct on-site inspections and face-to-face meetings with remote agents and intermediaries, is it possible to meet legal authorities’ expectations and ensure appropriate safeguards against corrupt activity?
When lockdowns and border closures disrupted supply chains, many companies needed to quickly onboard new business partners with fast-tracked background reviews. Ongoing travel restrictions and risks have largely prevented in-person training and review, leading to increased reliance on teleconferencing and online training tools. Amid this scramble, and with evolving business objectives, there has been little time to think about the larger implications of these shifts.
But enforcement agencies have been clear about their expectations – the pandemic provides no excuse for inadequate due diligence and monitoring. Short-term accommodation may be appropriate as companies retool their compliance programmes to meet new challenges, but there will ultimately be no reprieve from robust enforcement.
In-person visits and training have obvious advantages over online methods, allowing for immediate feedback and intuitive assessment of participants’ understanding. On-site interviews can also foster personal connections and produce a wider range of behavioural and environmental signals to interpret. Simple physical presence can provide tangible reinforcement of your company’s values and commitments and an opportunity to more completely understand the third party’s culture and processes.
Apr-Jun 2021 Issue
TRACE International