Compliance Officer update: This presentation shows why and how Compliance questionnaires are used in the context of the Third Party Compliance Due Diligence process. A proposal is made on key data and compliance information that should be obtained from the prospective Business Partner via self-questionnaire. It is the starting point for further analysis and background checks before a contractual obligation is concluded. The due diligence process should be designed to enable the identification of red flags.

1. Business Partner
Compliance
Applying compliance questionnaires for
selecting Business Partners
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2. Your benefits from this presentation
 Understand the Business Partner Compliance Due Diligence
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procedures that are applied by more and more multinational
companies for selecting their third party providers
How can small business set up a basic Compliance framework
and remain competitive in international business
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3. Due Diligence within the Business Partner
selection process is key to demonstrate effective
compliance procedures
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Multinational companies are under increased pressure to
demonstrate adequate procedures for the proper selection,
management and monitoring of their Business Partners.
Failure to do so can result in civil and criminal liability (e.g. under the
United Kingdom Bribery Act of 2010) and can lead to severe
reputational damages.
Implemented measures must be proportionate to the risk environment
a company faces. The higher the risks related to an industry, country or
go-to-market strategy are, the stricter must be the Due Diligence
procedures applied.
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4. What does Due Diligence in the context of the
Business Partner selection process exactly mean?
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To apply a questionnaire procedure to obtain relevant stakeholder and
company information directly from the source.
To let the Business Partner certify that he will comply with all legal
requirements and desired business conduct standards.
To obtain information on the Business Partner from an independent
source.
To conduct a screening of company stakeholders and legal entities
against most relevant international sanction-, PEP and terror-lists.
To be able to recognize and analyze “Red Flags”.
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5. Why is a Compliance questionnaire so important?
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To obtain all relevant master data from a potential Business Partner.
According to our experience it is extremely difficult to get reliable
information from service providers when it comes to smaller entities
and certain regions/countries.
To document that you have clearly communicated the rules and
expectations on compliant business conduct to your potential Partner.
A web-based questionnaire is a great instrument to let the Business
Partner certify that he will meet all legal requirements in the course of
the services he intends to render for you.
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6. What is a Compliance questionnaire and what
should it be used for?
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A Compliance questionnaire must be used for critical Business Partners
before a contractual obligation is made.
Critical Business Partners are “associated parties” under the definition
of the UK Bribery Act, section 7. In general, these parties are able to
influence the decisions of third parties in the interest of the principal
(e.g. sales intermediaries).
The questionnaire must be designed to (1) obtain all relevant master
data on the company and its stakeholders, (2) detect typical Red Flags
(indicators for potential Compliance violations), (3) instruct the Business
Partner on the expectations in terms of compliant business conduct and
(4) obtain a compliance certification.
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7. Example: Business Partner Questionnaire content
Key data
1. Legal name of company
2. Address of legal registration
3. Invoicing address
4. Foundation date
5. Name(s) of legal representative(s)
6. Name(s) of shareholder(s)
7. VAT / company registration number
8. IBAN used for bank transactions with principal
9. References
10. ….
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8. Example: Business Partner Questionnaire content
Compliance questions
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Stakeholders: PEP / public official involvement
Acceptance of principal’s code of conduct and/or other principles
Does Business Partner provide regular Compliance trainings?
Does Business Partner have a Code of Conduct and/or an Anti-BriberyPolicy?
Does Business Partner have a whistleblowing procedure?
Does any stakeholder have a conflict of interest when being engaged
for principal’s business?
Will core services be outsourced to third parties?
…
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9. Data evaluation
1. The completed questionnaire must be checked by knowledgeable staff
who is able to recognize and analyze “Red Flags”.
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Example for a “Red Flag”: Country of company registration, territory of
service and country of bank account do not match
2. Additional information from the internal Business Manager who is in
charge for the Business Partner selection should be obtained.
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Example: compensation structure, nature of service
3. Additional background checks (via internet, open source or service
providers) and a sanction list screening must be conducted.
4. The system should automatically calculate a risk score based on the
information provided.
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10. Resume
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Compliance questionnaires have become a wide spread tool to assess
compliance and ethics of potential Business Partners
To implement an effective procedure (that goes beyond windowdressing) organizations should consider the following watch-outs:
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Effective implementation begins with the right questions, based on a riskassessment (e.g. you need other questions, if you have no FCPA exposure etc.)
Effective implementation needs proper system support: do not even consider
managing the volume of information via Excel (!) by sending files back and forth
Effective implementation requires training. Employees involved in the process must
be able to recognize red flags among the information provided
Effective implementation requires skills and resources to scrutinize and manage
critical cases once red flags have been identified (exception and approval flows)
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11. Implications for small businesses
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Be prepared to answer Compliance questionnaires from multinational
companies
Multinational companies will not engage into business with partners
showing “Red Flags” (e.g. matches in watch lists, public officials as
stakeholders, in- transparent company structures, trustees as legal
representatives etc. )
The best way to pass Compliance checks is your reputation and a
history of compliant and ethical business conduct
Make sure, you have implemented - at least – a basic Compliance
framework (Code of Conduct and other policies, Compliance Training
to employees etc.)
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12. Thank you
B2b-compliance.com is the web resource center for Compliance training
material and policies
Ready-to-go solutions include for example
• Code of Conduct templates
• Anti-Bribery Policies
• Anti-Trust Training
• Conflict of Interest Training
• Proper Behavior at the Workplace Training
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