IM Yearbook 2020/21

There is scope to introduce a minimum standard
across the board, but the responsibility
also lies with the due diligence provider
to highlight any areas lacking that will result in
ineffective due diligence, on a case by case basis.
Eddy Leviten
How has the covid-19 pandemic affected
due diligence operations and particularly
your ability to verify information?
EL: We had planned ahead to ensure our business was resilient and we
migrated our staff to home working with no disruption to our clients.
In respect of our verification processes we did encounter some delays to
checks in-country, where government offices were closed and where travel
restrictions impacted on checks made on properties and locations in certain
territories. However, we have not had to curtail nor change the way we verify
information and have been able to continue to deliver reports to clients
within acceptable timescales. Inevitably, also, given the political and social
instability within some of the territories in which we conduct verification
we are constantly adapting our processes to ensure we can deliver the most
effective results for clients without compromising the accuracy of reports.
SW: Early on Refinitiv decided to move the entire company to a
virtual office environment before lockdowns were mandated by many
governments. We’re also fortunate to have robust and flexible technology.
We had upgraded our suite of collaboration and communication
tools recently, meaning we had access to teamwork applications,
and the transition to virtual office was relatively easy for us. As for
data retrieval and verification of information, of course, we observed
some delays in the retrieval of information from official sources in
countries with lockdown measures, especially those with less advanced
digitised databases. When it comes to local human intelligence, since
most of the industry source queries are within our existing network,
it has been possible to maintain a high rate of on-time delivery, as
telephone interviews replaced face-to-face meetings partially.
LA: Covid-19 has had an impact on industry operations around the world,
and the due diligence industry is no exception. Proper due diligence is
comprised of information garnered from public and proprietary data
sources, as well as local, in-country intelligence, comprised of human
source information, manual records searches, and in-person access to
official government ministries. In this way, much of our most valuable
intelligence was at the mercy of jurisdictional regulations and restrictions.
As Covid-19 intensified, most jurisdictions closed nonessential
businesses, implemented lockdown mandates and
banned public gatherings. These initial measures undoubtedly
impacted, and in certain cases temporarily halted, aspects of our
due diligence process, most significantly in the verification of
documents and credentials, reputational inquiries and site visits;
all of the areas requiring in-person interaction and contact.
Fortunately for due diligence operations, most countries experienced
some degree of lockdown measures at the same time, and only for a short
period of time, during which we all—providers and clients alike—took a
bit of a step back, got our new at-home worlds in order, and then resumed
operations at a time when most of the essential aspects of our due diligence
were able to proceed with some semblance of normalcy and without delay.
JS: When the pandemic intensified, we internally transitioned to 100%
remote work overnight across all of our locations. While working from
home was a relatively new concept for most of our researchers, the transition
has been remarkably seamless. Most digital sources have remained
unaffected during the pandemic though some in-person and telephone
verifications have been impacted by remote work. At the beginning of the
pandemic, there were some delays due to government shutdowns, but we
have recently seen a normalisation of lead times on most verifications.
The coronavirus
accelerated the adoption
of digital technologies
by most Citizenship by
Investment Units (CIUs),
which started to accept
online applications and
are requiring fewer
documents to lodge
applications and start the
due diligence process.
While this has made the
application process easier
for investors, do you have
concerns from a due
diligence perspective?
JS: The due diligence process relies
heavily on the review and verification
of documentation provided by the
applicants. As long as these are
transmitted to the due diligence providers
in a secure environment, there should
be no concerns. In fact, if the pandemic
has taught us anything, is that virtual
environments can facilitate the process
and potentially reduce the turnaround
times without compromising
the quality of the due diligence.
SW: This pandemic indeed unlocked so
many new opportunities people didn’t
think of or were not bold enough to
implement. We see a lot of innovation
happening in the client onboarding
processes—within the investment
migration sector but also in the banking
sector. The lower level of document
requirements should, however, be
balanced with a robust verification
process and with independent opensource
information collection. While
some documents may not be critical,
others—like those proving the legitimate
origin of the applicant’s sources of
wealth (SoW) and Sources of funds
(SoF)—remain critical to ensure that
CIUs do not accept illegitimate funds.
Common sense and a risk-based approach
need to be applied and adhered to
in the application-vetting process.
Investment Migration Yearbook 2O2O/2O21 79