What ISO 37001 ABMS Says About Due Diligence on Third Parties
To prevent bribery from occurring, the corporation needs to do a ‘clean-up’. Not only internally but externally too, that is, in relation to third parties. If a third party is involved in a violation, the corporation’s reputation as a partner is also risky even though the corporation is not directly involved in the violation. Therefore, corporations must conduct due diligence on prospective third parties to ensure that they uphold ethics and law.
Considering the importance of due diligence in minimizing the risk of bribery, ISO 37001 includes due diligence as a certification requirement. Clause 8.2 of ISO 37001 8.2, states that a company shall assess the nature of the bribery risks in relation to specific transactions, projects, activities, business associates and personnel, and shall be updated at a defined frequency so that new information can be taken into account.
Proportionate and reasonable
Conducting proper due diligence becomes challenging for the corporation because while the key is in the ‘proportionate and reasonable’ requirements to corporations’ size and bribery exposure, it also takes a lot of time to do it. For a high-risk prospective third party, the corporation needs to conduct in-depth due diligence. Other than their track record, reputation and operations, corporations need to do due diligence on its top executives’ as well as shareholders’ backgrounds related to the PEP list. Analyzing the results of due diligence also requires skills. Red flags are not always in the form of negative findings, as evidence that cannot be verified can also be included in that category, or be given a remark. Therefore, it is suggested that a corporation hires personnel who have the skills and experiences in conducting proper due diligence.
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