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A Due Diligence Policy sets out the systematic steps an organization takes to evaluate business partners, investments, and transactions before making key decisions. In the UAE, these policies help companies comply with federal laws on anti-money laundering, counter-terrorism financing, and economic substance requirements.

The policy typically outlines specific checks and procedures teams must follow - from verifying company ownership and financial records to screening against sanctions lists. For UAE businesses, it's particularly important as regulators require enhanced due diligence for high-risk transactions and relationships with entities from certain jurisdictions. Having clear guidelines helps protect organizations from legal risks while building trust with stakeholders.

Companies need a Due Diligence Policy before entering new business relationships or major transactions in the UAE. This includes mergers and acquisitions, joint ventures, hiring key suppliers, or working with international partners. It's especially crucial when dealing with high-value contracts or partners from jurisdictions with different regulatory standards.

The policy becomes essential during regulatory investigations, when seeking banking relationships, or pursuing government contracts in the UAE. Financial institutions require robust due diligence documentation for compliance with Central Bank regulations. Having this policy ready helps speed up business decisions while protecting against money laundering risks and regulatory penalties.

• Basic Due Diligence Policy: Covers fundamental checks for routine business transactions, focusing on UAE company registry verification and basic financial screening
• Enhanced Due Diligence Policy: Includes deeper investigations for high-risk relationships, following UAE Central Bank guidelines for sensitive sectors
• Sector-Specific Policy: Tailored for industries like real estate or financial services, incorporating specific UAE regulatory requirements
• Cross-Border Policy: Addresses international business relationships with additional checks for foreign entities and sanctions compliance
• Investment Due Diligence: Specialized for mergers, acquisitions, and major investments in UAE markets

• Corporate Legal Teams: Draft and update Due Diligence Policies to align with UAE regulations and company risk appetite
• Compliance Officers: Implement and monitor policy adherence, coordinate with regulatory bodies, and maintain documentation
• Board Members: Review and approve policies, ensuring they meet UAE corporate governance standards
• Department Managers: Execute due diligence procedures when onboarding new business partners or vendors
• External Auditors: Verify policy effectiveness and compliance with UAE Central Bank and regulatory requirements
• Business Development Teams: Apply policy guidelines when evaluating potential partnerships and investments

• Risk Assessment: Map your organization's specific risk areas and regulatory obligations under UAE law
• Industry Standards: Review UAE Central Bank guidelines and sector-specific requirements for your industry
• Stakeholder Input: Gather feedback from compliance, legal, and operations teams about practical challenges
• Process Documentation: Detail step-by-step procedures for conducting due diligence checks
• Technology Review: Identify tools and databases needed for screening and verification
• Training Requirements: Plan how staff will learn and implement the new procedures
• Review Timeline: Set regular review dates to keep the policy current with UAE regulations

• Purpose Statement: Clear objectives aligned with UAE anti-money laundering and counter-terrorism financing laws
• Scope Definition: Detailed coverage of transactions, relationships, and jurisdictions requiring due diligence
• Risk Assessment Framework: Criteria for evaluating business partners under UAE Central Bank guidelines
• Verification Procedures: Required checks for company registration, ownership, and sanctions screening
• Documentation Requirements: Specific records to maintain for UAE regulatory compliance
• Escalation Protocol: Process for handling high-risk findings and regulatory reporting
• Review Schedule: Timeframes for policy updates and compliance assessments

A Due Diligence Policy differs significantly from a Due Diligence Checklist in both scope and function. While they work together, each serves a distinct purpose in UAE business operations.

• Framework vs. Tool: The policy establishes overarching principles and requirements for due diligence processes, while the checklist is a practical tool for implementing those requirements
• Permanence: The policy is a standing document that requires formal approval and periodic updates, whereas checklists are operational tools that can be modified for specific transactions
• Legal Weight: The policy carries greater legal significance under UAE regulatory frameworks, serving as evidence of corporate governance, while checklists primarily document compliance with the policy
• Audience: Policies guide senior management and compliance teams, while checklists are used by operational staff conducting actual due diligence reviews