Due diligence is a way to understand a proposed relationship. Documents provide evidence, but they are most useful when they fit a clear explanation of the client, the arrangement and the expected activity. Preparing that explanation is a useful first step.
Who is entering the relationship?
For an individual, onboarding may require identity and address evidence. For a company, the published FIDERE framework describes incorporation records, constitutional documents and information about directors, shareholders and authorised signatories. The required documents depend on the arrangement and risk assessment.
Documents should describe the same client consistently. Where names, addresses or responsibilities have changed, explaining the change is more useful than assuming that an older document remains sufficient.
Who ultimately owns or controls it?
The name of a company alone does not explain its ownership. Where an arrangement contains several entities, an ownership chart can help connect the immediate shareholder to the ultimate beneficial owners. Supporting records allow those connections to be checked.
FIDERE’s corporate due diligence also considers business activity, expected transactions and relevant counterparties or markets. This context helps explain why the structure is being used and what activity is anticipated.
What explains the funds and the wealth?
A source-of-funds discussion concerns the origin of money associated with a particular arrangement or activity. A source-of-wealth discussion considers the wider accumulation of wealth. The two explanations may draw on related evidence, but they answer different questions.
The published policy allows supplementary information and, in higher-risk circumstances, further corroboration. No general guide can determine the complete evidence required for an individual case. The appropriate document request follows the actual client profile and proposed activity.
Keep the explanation current.
Completing an initial document request does not end due diligence or guarantee acceptance. Ownership changes, new business activities and different transaction patterns may lead to further review. Clients should provide accurate updates when material circumstances change, and use the agreed communication channel for sensitive supporting records.
