Conducting Due Diligence when Checking Counterparties on Your Own

Nikita Veremeev

07.08.2025 | 6 min read

Updated: 07.08.2025

In 2024, according to international studies, over 60% of corporate losses in cross-border transactions are related to insufficient counterparty verification and neglecting due diligence. Every third case of account blocking in EU and Asian banks is a result of compliance procedure errors and a formal approach to legal business verification.

But are you ready to jeopardize your company’s reputation, assets, and strategic prospects due to one underestimated deal?

In a context where regulators in the EU, UK, Singapore, and UAE are tightening requirements for KYC and AML, and banks and payment systems are implementing automated verification systems, self-checking of counterparties becomes not just an element of internal control but a key tool for survival and growth in international markets.

Lack of comprehensive verification is not only a risk of fines, blocks, and legal proceedings but also a real threat to strategic initiatives: from entering new markets to attracting investments.

Consider: how transparent is your next partner? Are you sufficiently protected from sanction risks, fraud, corporate conflicts, and reputational losses? Are you ready to integrate best practices of due diligence into business processes, not just to meet regulatory requirements but to outpace competitors in terms of internal control?

In this article, I reveal a step-by-step algorithm for independent counterparty verification, share tools, checklists, and practical cases from COREDO that will help not only minimize risks but also enhance your business’s investment appeal. If you want to get a practical guide to due diligence, adapted to the realities of the EU, Asia, and the CIS, I recommend reading to the end.

Due diligence: what it is and why to check a counterparty

Illustration for the section "Due diligence: what it is and why to check a counterparty" in the article "Conducting Due Diligence for Counterparty Verification Independently"

Due diligence: is a comprehensive legal, financial, and operational check of counterparties aimed at identifying risks, confirming the legal purity of the deal, and compliance with procedures. In practice, it is not just a formal collection of documents but a multi-level assessment system of corporate structure, beneficiaries, financial condition, and business reputation of a potential partner.

In international business, due diligence becomes a standard of corporate governance and internal control. Compliance officer, KYC, and AML procedures, counterparty audit: these are now not only regulatory requirements but also a strategic risk management tool.

Goals of due diligence for business

Risk assessment in working with counterparties: timely identification of signs of fraud, corporate conflicts, affiliation, and AML/CTF non-compliance.
Prevention of financial and reputational losses: reducing the likelihood of account blocking, fines, legal disputes, and negative publications.
Ensuring the legal purity of the deal: checking corporate documents, ownership chain, and history of court decisions.
Compliance with international compliance standards: integrating a risk-oriented approach, automating due diligence, and implementing internal company policies.

Types of due diligence: legal, financial, operational, anti-corruption

Legal due diligence: analysis of corporate structure, statutory documents, identifying affiliated persons, auditing corporate conflicts and court decisions.
Financial due diligence: analysis of financial statements, debt obligations, assessing solvency and tax risks.
Operational due diligence: checking business processes, internal policies, corporate governance, analyzing operational risks.
Anti-corruption due diligence: identifying corruption schemes, analyzing conflicts of interest, checking compliance with international AML/CTF standards.

Counterparty verification: step-by-step instruction

Illustration for the section "Counterparty verification: step-by-step instruction" in the article "Conducting Due Diligence for Counterparty Verification Independently"

Counterparty verification requires a systematic approach and step-by-step instruction: this reduces partnership risks and helps identify potential partner issues in a timely manner. For quality due diligence, it is important to form a team that can thoroughly assess both the legal and financial aspects of verification. Next, we will examine the key steps in organizing work and analyzing counterparty data.

Gathering a team for due diligence

In practice, COREDO has implemented dozens of projects where the success of due diligence was determined not only by the quality of tools but also by the competent organization of the process. It is important to define the goals of verification, gather a team with expertise in compliance, financial analysis, and corporate intelligence, appoint a responsible compliance officer, and implement internal control.

How to gather and analyze corporate documents

The first stage: auditing corporate documents: charter, registry extracts, meeting protocols, information about directors and shareholders. COREDO practice confirms: analysis of corporate structure and identification of affiliated persons allows early detection of fictitious companies, corporate conflicts, and hidden risks.

Particular attention is paid to controlling the ownership chain and analyzing debt obligations. In several COREDO cases, it was the audit of corporate documents that revealed signs of fraudulent schemes and non-compliance with internal company policies.

Verification of beneficiaries and ultimate owners

Proper verification of beneficiaries and identification of the ultimate beneficial owner (UBO): key to managing counterparty risks. The solution developed at COREDO includes analyzing the ownership chain, collecting supporting documents, checking for affiliation, and analyzing corporate connections through international databases.

In one recent deal in the Czech Republic, the COREDO team identified a hidden beneficiary connected to an offshore structure, allowing the client to back out of a risky deal and avoid AML/CTF violations consequences.

Financial reporting and solvency

Financial due diligence: this is not just a balance check but a deep analysis of financial statements, debt obligations, assessing solvency, and tax risks. At COREDO, we apply both classical financial analysis methods and scoring systems, allowing for performance comparisons with industry benchmarks.

Particular attention is paid to analyzing debt obligations and managing investment risks. In COREDO cases for EU clients, identifying hidden debts and overdue obligations became grounds for revising deal terms.

Customer verification for AML, sanctions, and PEP

Verification for AML/CTF compliance, sanctions lists, and PEP (politically exposed persons): a mandatory stage for any international business. The COREDO solution includes automated checks against international lists, regular database updates, and KYC procedure integration.

In COREDO practice, due diligence automation allowed reducing counterparty verification time from the UK from three days to several hours, reducing the risk of sanction list inclusion and ensuring compliance with international standards.

Reputation and business reliability assessment

Managing reputational risks: a task requiring a comprehensive approach: reputational audit, court decision analysis, corporate intelligence, fraud scheme identification. At COREDO, we integrate open data collection (OSINT), media publication analysis, court decisions, and industry platform reviews.

In a case for a Singapore client, a reputational audit revealed potential partner involvement in legal proceedings, which allowed for a revised cooperation strategy.

Open sources and due diligence automation

Modern tools for independent due diligence include automated verification systems, counterparty scoring, open data collection (OSINT), and corporate platform integration. COREDO’s experience shows that due diligence automation not only speeds up the process but also enhances verification quality through multi-channel analysis.

Due diligence in the EU and Asia: differences

Illustration for the section "Due diligence in the EU and Asia: differences" in the article "Conducting Due Diligence for Counterparty Verification Independently"
Due diligence in the EU and Asia have their differences, related to legislative specifics, information disclosure requirements, and established business practices. Understanding the specifics of each jurisdiction helps avoid risks and build transparent, effective business processes when entering new markets or making deals.

Therefore, it is important to understand the due diligence procedures characteristic of European countries in advance to minimize possible difficulties when doing business in the EU.

Due diligence for business in the EU: instruction

Define verification goals and gather a team.
Request corporate documents: charter, register excerpt, information about directors and shareholders.
Conduct corporate structure analysis, identify ultimate beneficiaries.
Assess financial statements, debt obligations, tax risks.
Check for AML/CTF compliance, sanction lists, and PEP.
Conduct a reputational audit using open sources and court decisions.
Document the results and integrate them into internal control.

Due diligence in Asia and Africa

In Asia and Africa, due diligence requires consideration of regional standards and corporate governance specifics. In several jurisdictions (e.g., Singapore, UAE), particular attention is paid to beneficiary identification, corporate structure analysis, and AML/CTF compliance verification.

The COREDO team encountered situations where verifying a counterparty in Asia required requesting documents from multiple state registries, using local services, and considering the national legislation specifics.

Counterparty verification according to international standards

Verification for compliance with international compliance standards (KYC, AML, CTF) is an integral part of due diligence for companies operating in the EU, UK, Singapore, and Dubai. COREDO practice confirms: integrating international standards into corporate policies and automating due diligence not only ensures regulatory compliance but also reduces operational and reputational risks.

Moving to the next section: For more effective implementation of these processes, it is important to use modern tools for independent due diligence.

Tools for independent due diligence

Illustration for the section "Tools for independent due diligence" in the article "Conducting Due Diligence for Counterparty Verification Independently"
Tools for independent due diligence allow a quick and objective assessment of future partners or counterparties’ reliability without involving external consultants. Thanks to modern services, key checks can be performed independently, providing vital information for decision-making at an early stage of partnership.

Services for counterparty verification

There are dozens of tools available on the market for independent legal entity verification: from international databases (World-Check, Dow Jones Risk & Compliance, LexisNexis) to specialized platforms for corporate structure analysis and financial reporting. At COREDO, we use a hybrid approach, combining automated verification systems with manual OSINT collection and corporate intelligence.

Due diligence automation: speed and quality

Due diligence automation allows scaling the process with an increasing number of counterparties, reducing the human factor, and speeding up decision-making. Implementing counterparty scoring, integrating with internal systems, and using efficiency metrics (verification speed, identified risk level, ROI) become best practices for due diligence in international business.

In one COREDO project, due diligence automation allowed a client from Estonia to process up to 100 new counterparties a month without increasing compliance officer staff, thus improving verification quality and reducing costs.

Risk assessment and management in the project

Illustration for the section "Risk assessment and management in the project" in the article "Conducting Due Diligence for Counterparty Verification Independently"
Risk assessment and management in the project require thorough work with any potential threat sources, among which interaction with counterparties stands as paramount. Mistakes at this stage can lead to financial losses and timeline disruptions, making counterparty analysis and verification fundamental tools for effective project risk management.

Typical mistakes in counterparty verification

Formal approach to analyzing corporate documents and ownership chain.
Ignoring checks for affiliation and ultimate beneficial owner.
Insufficient attention to debt obligation and financial statement analysis.
Lack of regular AML/CTF and sanction list compliance checks.
Underestimation of reputational risks and court decisions.

Due diligence mistakes: examples and consequences

In COREDO’s practice, there were cases where insufficient counterparty verification led to account blocking, legal proceedings, and loss of business reputation. For example, in one UK case, a client faced a sanction risk due to a hidden beneficiary, resulting in transaction blocking and the necessity to revise the entire supply chain.

Verification Stage	Main Risks	Tools/Methods of Identification	Recommendations for Minimization
Corporate Document Analysis	Fictitious companies, forged documents	Open data collection (OSINT), registry requests	Verify through official sources, use multiple services
Beneficiary Check	Hidden owners, affiliated persons	Corporate structure analysis, KYC	Request supporting documents, use scoring systems
AML/CTF and Sanctions	Sanction list inclusion	International list checks	Regular database updates, automation
Financial Analysis	Insolvency, debts	Report analysis, scoring	Compare with industry indicators

Due diligence in international business: recommendations

Due diligence in international business: is an essential tool that helps uncover hidden risks, ensure transaction transparency, and protect company interests when operating in new markets. This material examines key recommendations for conducting due diligence, starting with transaction and partner selection check specifics.

Due diligence in procurement and partnership

Integrate due diligence into every stage of procurement and partner selection processes.
Appoint a compliance officer responsible for internal control and counterparty audits.
Implement automated verification systems and counterparty scoring.
Regularly update internal company policies considering changes in international compliance standards.

Due diligence effectiveness metrics and ROI

Evaluating the effectiveness of due diligence includes analyzing the following metrics:

Time to verify one counterparty.
Number of identified risks and prevented incidents.
ROI (return on investment) from due diligence implementation: savings on legal expenses, fines, reputational losses.
Level of automation and process scalability.

In COREDO practice, introducing due diligence allowed clients to reduce incidents by 40% and speed up entry into new EU and Asian markets.

Tips for entrepreneurs

Independent due diligence checklist:

Define verification goals and appoint a responsible person.
Request and analyze corporate documents.
Check the ownership chain and identify the ultimate beneficial owner.
Analyze financial statements and debt obligations.
Check for AML/CTF compliance, sanction lists, and PEP.
Conduct a reputational audit through OSINT and court decision analysis.
Document the results and integrate them into business processes.

Risk minimization tips:

Use several independent sources for verification.
Implement due diligence automation for scalability.
Regularly update internal policies and train the team.
Don’t limit to formal checks – analyze corporate connections, court decisions, and reputational risks.

Recommendations for selecting tools and automation:

Choose services integrated with international databases and supporting counterparty scoring.
Invest in due diligence automation to speed up processes and improve verification quality.

Major mistakes and how to avoid them:

Don’t rely solely on formal document collection.
Don’t ignore corporate structure and affiliation analysis.
Don’t neglect regular AML/CTF and sanction compliance checks.

With the tightening of international compliance standards and the growth of cross-border transactions, independent counterparty verification becomes a strategic business asset. COREDO’s experience shows: integrating due diligence into corporate practice not only minimizes risks but also creates new opportunities for growth and development in global markets.