A due-diligence checklist for any counterparty

Why a checklist helps

Due diligence is the work of finding out who you are dealing with before you commit time or money. A checklist keeps you from skipping a step because the deal feels good or the other side is friendly. It also produces a record, which is useful to banks, partners and advisers later.

Step 1: identity of the company

• Legal name, registration number, address and date of incorporation, matched with an official company register where one exists.
• A website and email domain that fit the company, and whose registration dates make sense.
• A phone number on the official site, which you call yourself.
• Names of directors and owners, and whether they appear in other registers.
• Whether the company has existed long enough to have the trading history it claims.

Step 2: the person you talk to

• Their role and authority: do they sign for the company, or represent someone who does?
• A copy of a mandate or power of attorney if they act for another party, with the issuer's contact for confirmation.
• A video call, so you see and hear who you deal with.
• A professional profile that is consistent with what they tell you.

Step 3: the product

• A specification and a recent independent analysis.
• The location of the stock and its ownership, with a document you can verify with the holder.
• Photographs or a video made recently, with a dated item in the frame.
• An offer to allow an independent inspection before payment.
• Production or origin records that make sense for the quantity.

Step 4: the money

• Bank details on the bank's letterhead, confirmed with the bank by a number you found yourself.
• A payment route a recognised bank can handle and that suits both countries.
• Account names that match the contracting company, not a third party or a personal account, unless a reason is documented and checked.
• A reference from a bank or a trade partner where possible.

Step 5: screening and compliance

Check names of companies, owners, vessels and countries against sanctions lists published by the relevant authorities, and note the date of the check. Many banks apply their own screening, and they will refuse a transaction that involves a listed party or a restricted route, so it is cheaper to ask early. Pay attention to product restrictions, export licences and import permits.

Step 6: track record

• Trade references: ask for two or three counterparties you can contact.
• Search for news, court records or complaints in the company's name and the names of its directors, keeping in mind that absence of results is not proof.
• Membership of recognised trade associations, which can usually be confirmed with the association.
• On Tonport, look at the profile, the verification status, ratings and the history of posts.

Step 7: start small and stage the deal

Even after good checks, begin with a small lot, a sample or a first container. Use independent inspection, and pay in stages tied to verified events. A partner who respects the process is usually a good partner.

Red flags worth writing down

Keep a simple log of what you checked, the date, the source and the result. It makes later decisions easier and keeps everyone on your side honest.

• Refusal of a video call or an inspection.
• Bank details that change during the deal.
• Pressure to skip steps.
• Inconsistent names across documents.
• A story that changes, such as a different origin or quantity.

Frequently asked questions

How long should due diligence take?

A basic check can take a day or two, and a first deal with a new bank may take longer. The time is small compared with the value at stake.

Can I rely on a company's website?

A website is easy to create. Treat it as a starting point and cross-check with registers, calls to official numbers and references.

What if the other side refuses to answer my questions?

Genuine parties usually expect questions. Persistent refusal is a reason to pause or to walk away.

Do I need to do this for every deal?

Do the full check for a new counterparty, and refresh it when something changes. For known partners a lighter check on each new instruction is enough.