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.
