Due Diligence

DETAILS:
Due diligence in Indonesia refers to the process of thoroughly investigating and evaluating a company, individual, or asset before entering into a business transaction, investment, or partnership. It involves a comprehensive review of legal, financial, operational, and regulatory aspects to assess risks, liabilities, and the overall viability of a deal.

Due diligence is crucial for mergers and acquisitions, investments, partnerships, joint ventures, and other significant transactions in Indonesia. This process helps investors and businesses make informed decisions by identifying potential risks or hidden liabilities.

REQUIREMENTS:

1. Customer Identification and Verification

Identity Verification: Collect and verify information to establish the customer’s identity. This typically involves obtaining official documents such as passports, driver’s licenses, or national ID cards.
Verification of Residential Address: Confirm the customer’s residential address through utility bills, bank statements, or government correspondence.

2. Beneficial Ownership Identification

For corporate, partnership, trust, or other legal entity customers, identify the beneficial owners who ultimately own or control more than a certain percentage (often 25%) of the company or entity.
Verify the identity of these beneficial owners to the same standard as individual customers.

3. Understanding the Nature and Purpose of the Business Relationship

Gather information about the intended nature of the business relationship, including the types of transactions expected and the purpose of the accounts or services being used.
Assess the customer’s business and financial background to establish a risk profile.

4. Ongoing Monitoring

Conduct continuous monitoring of business relationships and transactions to ensure consistency with the customer’s risk profile, business and financial activities, and to identify suspicious transactions.
Keep customer information, risk assessments, and financial profiles up to date.

5. Risk Assessment

Perform a risk-based assessment to determine the level of due diligence required. This includes identifying lower-risk customers for whom Simplified Due Diligence (SDD) may be appropriate and higher-risk customers requiring Enhanced Due Diligence (EDD).
Factors influencing risk assessment include customer type, country of residence, product or service used, and transaction patterns.

6. Enhanced Due Diligence (EDD) for Higher Risk Situations

Apply EDD measures for customers and transactions presenting a higher risk, such as politically exposed persons (PEPs), high-risk countries, or unusual transaction patterns.
EDD measures may include additional information on source of funds, closer ongoing monitoring, and senior management approval for establishing or continuing such relationships.

7. Record Keeping

Maintain comprehensive records of all CDD information, including documents obtained for verification, account files, business correspondence, and results of any analysis conducted (e.g., transaction patterns, risk assessments).
Ensure records are kept for a minimum period as required by law, typically five to ten years after the termination of the business relationship.

8. Compliance and Reporting

Implement systems and controls to ensure compliance with CDD requirements, including reporting suspicious activities to relevant authorities as mandated by national regulations.

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Due Diligence: By Request