INTEGRITY DUE DILIGENCE (IDD)

WHAT IS INTEGRITY DUE DILIGENCE?

Integrity Due Diligence (IDD) is the process of ascertaining the credibility of a company and its founders so as to safeguard oneself from fraud and future litigations. It is a fraud mitigation and compliance exercise which safeguards companies and investors from being defrauded due to lack of proper background checks on various stakeholders. The World Bank says “IDD refers to investigating the integrity risk posed by stakeholders in projects, deals and other joint enterprises.“

"Millow has been providing us their Integrity Due Diligence (IDD) services and we are very happy with their stringent, yet quick solutions as well as their excellent customer support"
- Partner at French MNC (confidential)


Below mentioned is a list (which includes but not limited to) of Due Diligence checks required are as below and are divided into 4 parts. Additional assessment criteria for NGO’s/ Not Profit Organizations are separately mentioned:

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A. ASSESSMENT CRITERIA FOR CORPORATES/ COMPANIES/ OTHER FOR-PROFIT FIRMS

  • Registration and Incorporation Details Verification
  • Supply chain vendors/partners/client check
  • Business Processes being followed – Organizational Structure, Payments, Security etc
  • Business sustainability/expansion plans of the Applicant, as per vision/mission of the Applicant; Shareholding pattern of Applicant
  • Any other companies or entities in which the Applicant has controlling/ownership interest
  • Potential Conflict of Interest
  • Antecedent checks of Promoters/Directors/ Trustees (PEP check, Criminal records)
  • Financial Statements Analysis of the Applicant, for the past 3 years
  • Check for Business sustainability for short term (1 year) and medium term (3-5 years)
  • Banker Verifications & Status-Check for Bank Transactions of the existing businesses
  • Credit Defaulter Check (Defaulter’s List of CIBIL or other financial databases)
  • Loan defaulter’s database check
  • Ministry of Corporate Affairs defaulting companies/ Defaulter Directors' check
  • Bankruptcy check
  • Criminal and civil Litigation/ record Check
  • Regulatory / Compliance Database Checks
  • Regulatory / Compliance Database Checks
  • Income Tax, Good & Service Tax liabilities verification
  • DUNS No check
  • Global Compliance Checks:
    • SAM Check
    • OFAC List check
    • United Nations Security Designation List Check
    • Proscribed Terrorist Groups or Organisations
    • Current List of Designated Persons, Terrorism and Terrorist Financing
    • Other Global Compliance Checks
  • Compliance Assessment: Checks regarding to ethical history w.r.t:
  • Is there any pending, current or threatened internal or external investigations or proceedings relating to allegations of fraud, theft, bribery, corruption, money laundering, human rights violations, anti-competitive or other unethical or unlawful behaviour connected with Applicant or any of its directors, senior management, Trustees, Members, 10%+ shareholders or owners?
  • In the last ten years has Applicant or have any directors, senior management, Trustees, Members, 10%+ shareholders or owners or any other person who has power of representation, decision or control of Applicant or any of its associated organization/firm or subsidiary companies:
  • ever been bankrupt, insolvent, unable to pay his or its debts, sought protection from his or its creditors, been wound-up or compulsorily dissolved by any court or tribunal or been involved in any insolvency and bankruptcy proceedings?
  • ever been convicted of a criminal offence in any country related to fraud, theft, bribery, corruption, money laundering, human rights violations, tax –evasion, social security violation, anti-competitive or other unlawful or unethical behaviour?
  • arrangement with any law enforcement, prosecutorial or regulatory agency or body relating to investigations or allegations of fraud, theft, bribery, corruption, money laundering, human rights violations, anti-competitive or other unlawful or unethical, behaviour?
  • ever been convicted of an offence related to abuse of children?
  • ever been listed by any country or Organization or any authority for being involved in terrorism or money-laundering activities?
  • ever received or been the subject of allegations or press/media reports of misconduct - including fraud, bribery, theft, corruption, money laundering, human rights violations, anti-competitive behaviour (including bid-rigging, cartels, collusion or coercion), damage to the environment, health or safety of employees or employment or abuse of children?
  • ever had cancelled or revoked or failed to hold any licence or membership of an organization/firm required by law?
  • Is the Applicant or any director, senior manager, 10%+ shareholder or owner of the Applicant, or any of its associated or subsidiary companies, currently sanctioned by, disqualified, blacklisted, barred or suspended from doing business with any government, national or public international organization/firm including any multilateral development bank?
  • Basic Adverse media searches: Check of Local, National, Global media, Blogs and internet data bases for history of any negative information / default
  • Intelligence collection: Interaction 2-3 key business principals/Directors to confirm the business credentials, financial processes or corporate governance matters
  • Checks relating if the Applicants have current, published policy and/or procedures and/or statements w.r.t:
  • Anti-Fraud and Anti-Corruption Policy
  • Conflict of Interest Policy
  • Ethical Code of Conduct
  • Equity and Diversity Policy
  • Child Protection Policy
  • Modern Slavery and Human Trafficking Statement
  • Policy on Prevention of Sexual Exploitation and Abuse
  • Whistle Blower Policy
  • Involvement in any activities of frauds or crimes, any connections to organized criminal outfits.
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