Due diligence. It’s a phrase synonymous with precaution, prevention, and authenticating. Used since the mid-fifteenth century, its official definition is “the care that a reasonable person takes to avoid harm to other persons or their property.” In today’s business environment, due diligence encompasses ID verification, claims authentication, and general background confirmation; it helps you know your customer. It’s also a crucial step in fraud prevention. 

The question is: Is your organization’s due diligence process enough?

In our practice, we can state unequivocally that every fraud case we work could have been mitigated or the fraud captured before it hit the books. What went wrong? Invariably, the due diligence process was not extensive enough to detect a potential fraud before hitting the books. The organization took it for granted that they knew their “customer.” Their validation process stopped short.

Most companies do an excellent job of conducting due diligence. However, their protocols tend to rely on the honor system and clients telling the truth. Career criminals and fraudsters bank on this and use it to their advantage. They use current technology to forge and/or fabricate “customer” documentation, gambling that the validation process won’t be extensive enough to detect the fake. Then they’re in. Their “customer” subsequently makes claims and collects settlements costing millions of dollars and extraordinary amounts of time. 

To truly know your customer, it’s imperative to have top-notch due diligence resources that can catch discrepancies or detect fabricated documentation, including professional investigators like ours. We regularly capture fraud using synthetic identities, phony receipts, or false medical records to collect on medical claims. From fake passports to invented utility bills, fraudsters produce documents and medical records from remote regions of the world assuming companies won’t invest the time and money to validate the information. In many instances, a remote location is used knowing it makes investigation difficult and hoping the respective company will overlook conducting the due diligence. Sound familiar? Professional due diligence investigators bring a level of experience and familiarity with these cases that pays for itself in terms of time and money saved. They know what to look for, where to access validation, and how to nip these crimes in the bud.  It is not important to just check the documents at the source but it requires a professional that understands the process of issuing such documents and whether they meet the local legal requirements. It is one thing to interview a doctor on the legitimacy of a bill submitted with a claim but it is another understanding the diagnosis of the medical condition and whether the billing meets the local taxation requirements.  

The need for professional due diligence increases at the international level, a trend we saw in 2019. In our work with foreign nationals, the due diligence process is hindered by the lack of credible documentation validation in many high-risk countries. This makes it much easier for criminals to create or purchase fake documents and identities in these areas. It takes a keen professional eye, extensive experience, and in-country acumen to recognize and detect these phony identities and related documentation. We’ve worked many cases around the world where the applicant’s identity and submitted documents were totally fabricated. The information would have easily passed through standard due diligence inspections if our professionals hadn’t been there to detect the irregularities.  

The bottom line? Investing in your due diligence protocols, technology, and investigation partners is a prudent business decision. It ensures you truly know who your clients are and aren’t. Making it known your organization invests in due diligence resources will undoubtedly prevent questionable claims and work to mitigate financial fraud. 

Benjamin Franklin said: An ounce of prevention is worth a pound of cure. Due diligence is your ounce of prevention. It’s not an area to neglect or take for granted. We’re here to help you take your due diligence to the next level. Give us a call. 

Need more information on professional due diligence services? Contact us. Our experts are happy to help.

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