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Due diligence VDRs bridging the gap between traditional and digital due diligence is a crucial part of many investments and business transactions. It aids companies in making informed decisions and assess the risks, opportunities, and compliance requirements. It involves conducting in-depth analyses of assessments, investigations, and analyses of data and information typically from both internal and external sources.

Due diligence can be operational, financial or strategic. Here are a few of the most commonly used types.

Financial due diligence involves examining the financial statements of a prospective company and identifying red-flags, for example, inconsistencies in accounting. It includes analysing the firm’s business, competitive position, leadership structure, and other factors to determine whether a deal is an ideal one.

Legal due diligence is a look at areas like the corporate and legal structure, commercial contracts and employment agreements, intellectual property, information systems Environmental health and safety and safety, regulatory compliance, litigation and taxation, and property. Due diligence of this kind can assist buyers in identifying the strengths, weaknesses and potential issues. It will also help to negotiate the best deal.

Customer due diligence (opens in a new window) is a crucial element of the Know Your Customer process. All financial institutions must comply with FATF-compliant laws and conduct customer due diligence. It’s designed to prove that customers are who and what they claim to be, and that they are not involved in terrorist or money laundering funding activities. It involves collecting customer data such as their full name the date of birth, address, and contact details. It also involves confirming their identity by asking for proof of identity documents and comparing them with third-party databases and analyzing their actions for any suspicious activity.