Using Site Visits to Overcome Enhanced Due Diligence Challenges

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By George Porter, Knowledge Manager, Ground Truth Intelligence

Compliance due diligence isn’t always straightforward, especially when it comes to global information collection. While significant swathes of records are available online, in-person information gathering is still required for certain pieces of essential data. Physical site visits still form a part of many due diligence processes, especially where independent verification of an address or location is required. Common scenarios include confirming that a company actually has an office at its registered address or verifying a residential address that has been highlighted on corporate registries.

Due diligence analysts will know the difficulties associated with managing this information request on a global scale. Finding and managing multiple individual subcontractors to conduct site visits can be a huge undertaking. So what should you be asking for when it comes to site visits and how do you get the best possible information from an on-the-ground investigator?

Let’s take a look at some common enhanced due diligence challenges that benefit from a physical site visit and offer some suggestions for getting the most from your site visit.

Challenge 1: Supporting OSINT research

The depth of OSINT (open-source intelligence) research for due diligence will vary by organisation, as well as by jurisdiction. It will generally include image analysis and analysis of map data, providing analysts with a lot of rich, unverified, information. But this type of information gets out of date quickly, and establishing the exact date an image was taken can be a challenge in itself. Take Google Maps for example: images are generally updated every one to three years, in some cases even less frequently. In other scenarios there may be no open-source imagery at all, or your OSINT research is missing some critical information that is specific to your due diligence requirements.

Using a site visit to gather the most up-to-date information allows you to compare it with your OSINT and answer some of the outstanding questions you might have. You can check it against your previous sources and establish what has changed or what is new. What’s more, information gathered by an on-the-ground investigator can provide a wealth of new intelligence. OSINT research can be hyper-focused on one aspect of a case or an image, but an investigator walking around the neighbourhood can gather information without these boundaries.

Challenge 2: Verifying a business presence

Research of company records is a vital part of the due diligence process. Whether you’re retrieving records online or offline, checking corporate registries is essential for establishing who owns a company, its financial status and who controls or oversees its operations. However, checking these records often only tells you what information the company has independently filed. And while there are severe penalties for filing false information, it’s an unfortunate fact that this does not always deter bad actors.

Sometimes the best way of checking a business’s operations is turning up and having a look at them in person. The major fraud that occurred at Wirecard is a stark reminder of the importance of site verification as part of the due diligence process. From a corporate records perspective everything was fine, the filings looked in order, but a simple site visit exposed some shocking truths. Its third-party partners in the Philippines were famously exposed by Financial Times journalist Dan McCrum as a world away from the picture gathered in corporate records. Addresses linked to the payment businesses were in fact found to be a residential home for a surprised Filipino fisherman as well as a holiday coach company.

Challenge 3: Verifying a residential address

Once more, verification of a residential address is a pillar of due diligence research. Unfortunately, there is no consistent standard for remote verification across sectors and jurisdictions. While electoral rolls and credit records can help you verify residence electronically in developed countries, this only works with people who have credit histories or who vote and choose to share their data. These types of records work less well with younger people in big cities who tend to move more often, especially if the address they live in has changed over time. Requesting documents can help with this but often they’re just utility bills and bank statements which are easy to counterfeit.

In many cases where there is missing or unclear information, or when online address information just doesn’t exist, a site visit can be the most effective alternative. Using an on-the-ground investigator to confirm the address, check the name on the mailbox and in some instances talk to the concierge or neighbours, can overcome this common due diligence challenge.

Getting the most from a site visit

Maximising the value of information gathered as part of a site visit requires clear communication with your on-the-ground investigator. A little bit of direction prior to the visit can provide much richer intelligence and prevent additional costs with repeat visits. Here are some tips that you may want to keep in mind for your next site visit.

  • Request photos from multiple perspectives to give you a contextualised view where possible.
  • Ensure your site visit is done in daylight hours for maximum clarity.
  • Request auxiliary information, for example a description of the local area.
  • Compare site visit images with social media information; how do they compare?
  • If there is a discrepancy, request as much additional information as possible (e.g. any other businesses there/has the business changed name).

Using site visits in the right scenario, combined with clear instructions to your on-the-ground investigator, will ensure you get the most successful results for your enhanced due diligence projects all around the globe.