Local agents and intermediaries are essential for most companies that want to break into new foreign markets. They can help to navigate bureaucratic mazes, understand regional customs, and secure introductions to important decision-makers. It’s important to realize that the qualities that make an intermediary attractive to a company often are the same as those that make the relationship risky.
You know about bribery risk—the serious harm that can follow from an intermediary’s use of corrupt means to pursue a company’s goals. Consequently you need to conduct due diligence on your third parties. But the reality is that not all companies have the same resources available for the task.
The categories of information collected during a due diligence review, and the level of scrutiny and detail required, will vary depending on the risk level of the relationship. But due diligence can be streamlined and shared. All due diligence reports have similar baseline components: beneficial ownership, qualifications, ties to the government and reputational screening. Also, most commercial intermediaries work with several multinational companies. Third parties are often willing to undergo--at their own cost--a single due diligence review that meets international requirements. They can then choose to share the report with all of their business partners, avoiding the wasted effort of duplicative due diligence reviews.
TRACEcertification is an enhanced due diligence review that provides detailed and actionable insights into a candidate’s business operations, reputation and beneficial ownership. In addition, TRACEcertification requires candidates to complete anti-bribery training and adopt a Code of Conduct addressing bribery, if one is not already in place.
The TRACE Intermediary Directory is a free, publicly searchable database of these pre-vetted and trained small- and medium-sized enterprises worldwide. All companies listed in the Intermediary Directory have completed the TRACEcertification review or renewed their verified report within the last year. The intermediaries own their due diligence reports and can share them with all of their business partners. You may request and obtain TRACE Certified Due Diligence reports in the Intermediary Directory at no cost.
There is no such thing as “fool-proof” due diligence. While robust due diligence can help companies understand the level of risk that a third party is likely to bring, a clean past is no guarantee against future misconduct. Relationships have to be managed and suspicious conduct audited. Due diligence is a process, not an event, but a TRACEcertification report is a robust first step relied upon by hundreds of multinatationals.
Pia Vining is Senior Director of Due Diligence at TRACE, a globally recognized anti-bribery business organization. Prior to joining TRACE, Ms. Vining was a litigation specialist in the tax department of a major U.S. law firm. She graduated from the University of Helsinki, Faculty of Law, and holds an LL.M. degree from The George Washington University Law School.
Contributors and Writers are members and associates of the MD/ DC District Export Council. The views expressed do not necessarily represent the opinions of the MD/DC DEC.