5/21/2023 0 Comments Due diligence meaningThankfully, there are many resources out there for companies and sole traders looking to improve their customer due diligence. In fact, for lawyers and those working in financial services, severe infractions can result in disbarment or revocation of your license. Failure to comply with regulations could end in prosecution, fines, or in severe cases, both. The legal consequences of non-compliance can be enormous due diligence is simply the cost of business now, and if you don’t take adequate measures or fail to record your acts of due diligence, you could find yourself out of business.Īs well as business implications, failing to follow through on due diligence requirements can have legal and financial implications. These days, most industries have some regulations that require companies to complete, and keep records of completing, acts of due diligence. The financial sector was the first to be impacted in a legal sense, with the Securities Act of 1933 one of the first regulatory changes requiring due diligence and transparency to protect investors. Since the stock market crash of 1929, the concept of due diligence has been steadily creeping into every industry in the world. It’s all about showing you have done your research and have taken all necessary and reasonable steps to provide a fair, ethical and safe service. For those who work in hospitality, it can mean keeping records of food temperatures, spoiled food destruction, and the regular maintenance of equipment. The precise meaning of this differs for different industries, but it always comes down to three main factors:įor those in financial services, for example, it means keeping a paper trail to show that regulatory requirements and necessary checks have been made. What is due diligence?ĭue diligence is a broad term that, in its most basic form, means to take all reasonable steps to avoid committing an offense in both a legal and moral sense. It is a way of taking care of customers and keeping your business safe. Though it may seem like a fluffy or vague term, due diligence actually has a specific but widely applicable meaning. Due diligence has become somewhat of a buzzword for entrepreneurs and business owners these days, and for good reason.
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