ARTICLE
9 July 2025

Due Diligence As A Compliance Shield

WL
World Law Group

Contributor

Ranked an Elite Global Network by Chambers and Partners, World Law Group is one of the oldest and largest international networks of independent full-service law firms, created to meet the legal needs of multinational companies. Founded in 1988, the network's founding firms had the foresight to see the growing need to service clients globally while understanding the value of local knowledge and insight.
Mónica Mariela Medrano Chiquitó, Senior Counsel at ARIAS Guatemala and expert in Dispute Resolution, Antitrust, and Compliance, presents this article on the importance...
Worldwide Corporate/Commercial Law

Mónica Mariela Medrano Chiquitó, Senior Counsel at ARIAS Guatemala and expert in Dispute Resolution, Antitrust, and Compliance, presents this article on the importance of third-party due diligence to prevent legal, reputational, and financial risks. In today's global context, suppliers and partners can severely compromise corporate integrity.

In recent years, compliance programs have stopped focusing exclusively on the internal operations of companies.

The new frontier of compliance involves suppliers, distributors, contractors, intermediaries, and agents who, although not on the payroll, can pose legal, reputational, and economic risks even greater than a poor manager.

In a context where global scandals such as Odebrecht or Siemens have implicated business partners across multiple countries, it becomes clear that failing to conduct proper due diligence is, in practice, corporate negligence.

Central America is a region with high levels of international trade and strong ties to U.S. and European corporations. Laws such as the U.S. FCPA (Foreign Corrupt Practices Act) and the UK Bribery Act have extraterritorial application. This means a company in Guatemala could generate criminal liabilities or administrative sanctions for its parent company in New York or London.

The same applies to environmental, labor, or transparency standards. Today, a company can be excluded from a bidding process, an ESG program, or a global supply chain simply for failing to properly vet a supplier on time.

How do I conduct third-party due diligence?

Through a systematic process of investigation and risk assessment of potential suppliers, distributors, intermediaries, partners, or any party with whom a commercial relationship is intended. This includes, among others:

  • Review of legal and reputational background
  • Verification of UBOs (Ultimate Beneficial Owners)
  • Analysis of corporate structures and financial vehicles
  • Assessment of political ties (PEP forms)
  • Screening against international watchlists (OFAC, UN, EU)
  • Verification of minimum internal compliance policies

The depth of the analysis will depend on the perceived risk: a customs agent is not the same as a politically connected company in the region.

Hypothetical consequences of ignoring due diligence:

  • A multinational

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More