How customer due diligence can help both foreign and domestic risk assessment


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Customer due diligence is important for financial transactions on both an international and domestic level, and firms must pay attention to the rules and regulations put in place by the Foreign Corrupt Practices Act (FCPA) in order to maintain an appropriate standard of compliance.

According to the official website of the United States Department of Justice, this act was first established in 1977, although it has been updated since and makes reference to the work of other government entities, specifically the Office of the Attorney General.

The statutes of the Anti-Bribery and Books & Records Provisions of the FCPA, available on the site, lay out clear definitions for who may be considered a domestic or foreign presence and therefore subject to different conditions.

This pertains to what constitutes a bribe: the Act alleges that this may include”payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give or authorization of the giving of anything of value.”

Another resource, a list of guidelines provided by the DOJ and the United States Securities and Exchange Commission, explains the far-reaching way that they apply. They may pertain to associates — those who weren’t actively involved with a criminal act and those who benefited from it — because the ultimate goal is always to encourage better practices.

“No executive should be above compliance, no employee below compliance, and no person within an organization too valuable to be disciplined, if warranted,” the guidelines read. Possible penalties for violators can be placed in different categories, and include “collateral consequences” like debarment and a loss of export privileges.

Although the resources provided by the government can be helpful in policing fraud and lowering risk, enhanced due diligence can be achieved with strong CDD solutions.