Due Diligence
Due Diligence
Due diligence is a comprehensive check of a counterparty, partner or deal before it is concluded, covering legality, finances, reputation and compliance risks.
What is Due Diligence?
Due diligence (DD) is a procedure carried out before signing a contract, launching a partnership or making an investment, to understand who you are dealing with and what risks the deal carries. In high-risk verticals the check is almost always broader than a standard business check: it adds licenses, payment history, and links to sanctioned and politically exposed persons.
## How it works
The check usually runs through several blocks: company registration and beneficial owners (who actually owns and controls the business), the existence and currency of licenses or permits, operating history and reviews, financial indicators and source of funds, court and regulatory history, and screening against sanctions lists. The results are recorded in a case file, which is used to decide whether to work together and on what terms (limits, reserves, additional guarantees).
## Where it applies
In gambling and betting, DD covers the operator and its license, as well as payment providers and affiliate networks. In crypto, it covers exchanges, custody providers, token projects and their teams. In fintech and payments, it covers merchants, ISOs and agents that an acquirer onboards. In dating, it covers advertising partners and offer owners, and in nutra, it covers manufacturers and suppliers of dietary supplements, where quality certificates and confirmation of the claimed properties matter.
## What it affects
DD results directly determine whether a connection is approved, what turnover limit and reserve are set, and whether enhanced checks will be needed. Weak DD often ends in frozen payouts, a closed bank account or a lost license at the partner's side, and with it your money.
## Common mistakes
The most common mistake is checking only the website and the documents sent by the counterparty itself, without independent verification against registries. Another is a one-time check with no re-review: ownership, licenses and reputation change over time. It is also a mistake to rely on a single source or to ignore negative news in open sources.
FAQ
How does due diligence differ from KYC and KYB?
KYC and KYB are the identification of a client or business, that is, verifying 'who this is'. Due diligence is broader: it includes assessing the risks, finances, reputation and legality of the deal itself, while KYC/KYB is one of its mandatory elements.
Who carries out due diligence in high-risk verticals?
Most often it is the company's compliance department, an external verification provider or the legal team. Small teams may do the checks themselves, but then it is important to record the sources and results.
How long does due diligence take?
It depends on the depth of the check and how complete the counterparty's documents are. A simple check may take a few days, while an extended check with owner and source-of-funds verification takes noticeably longer.