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When due diligence becomes digital

07 Novembre 2017 Par Lou Kiesch and François Kim Hugé - Partners - Deloitte Luxembourg
 (Photo : Deloitte Luxembourg )

For asset managers, knowing your distributor is as important as knowing your clients. There is an old saying that goes “better safe than sorry”, and a solid due diligence process is arguably the best illustration of this important message. 

Performing a comprehensive due diligence process prior to selecting and onboarding a distributor is key to success, but it does not stop there. As stipulated in the CSSF Circular 12/546, management companies and investment companies which have not designated a management company, are responsible for performing an initial and ongoing due diligence on the distributors with which they work. This task can be time-consuming and requires significant resources.

Asset managers are now operating in an environment with increased regulatory pressure combined with frequent compliance controls and an uptick in fines and sanctions. Few professionals would question the importance of a solid due diligence process and the role it plays in reducing different kinds of financial and business risks. However, general expectations when it comes to operational efficiency and a swift onboarding process can be difficult to combine with a detailed and thorough due diligence process. This is where digital solutions can make a real and notable difference.

Many firms use due diligence questionnaires as a basis for their due diligence process. These questionnaires typically cover aspects such as risk management, operating model, sub-distribution and marketing materials. As importantly, the due diligence process should put priority on all aspects related to Anti-Money Laundering and Counter Terrorist Financing laws and regulations. The reputational damage stemming from working with distributors with dodgy business practices can be devastating for asset managers, a lesson some organisations unfortunately learnt too late.

The initial selection of distributors and the ongoing monitoring of their activities is therefore of crucial importance. It is central to put adequate measures in place to ensure that distribution enables commercial success, while managing the related risks.

Our solution for Digital Due Diligence on Distributors, also called D2D2, provides you with an effective and complete distributor oversight and thereby allows you to mitigate risks linked to your distribution network. We offer an intuitive digital platform and online questionnaires, with customisable dashboards, and we help you analyse the responses from your distributors from a compliance and risk perspective.

D2D2 was designed to help distributors fill in the due diligence questionnaires faster by leveraging historic responses to similar questions and online communication features. The results come in the form of improved and faster response rates to your questionnaires, and better relationships with your distributors, because by making the process efficient and easy, you show that you care.

Save time and reduce costs by streamlining your due diligence processes―and remember: Better safe than sorry.

For more information about D2D2, go to the dedicated website:

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