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A Due Diligence Policy sets out the systematic steps an organization takes to assess and verify business relationships, investments, and transactions. In Saudi Arabia, these policies align with the Kingdom's Anti-Money Laundering Law and help companies meet their obligations under the Capital Market Authority regulations.

The policy guides teams through required background checks, risk assessments, and documentation processes for new partnerships, mergers, or major deals. It includes specific checkpoints for reviewing financial records, ownership structures, and compliance history - protecting organizations from legal, financial, and reputational risks while supporting the Saudi government's Vision 2030 goals for transparency in business.

Consider implementing a Due Diligence Policy before entering significant business relationships or transactions in Saudi Arabia. This includes mergers, acquisitions, major supplier contracts, or joint ventures. The policy becomes essential when engaging with new business partners, especially those handling substantial financial transactions or operating in high-risk sectors.

Your organization needs this policy when expanding operations, seeking Capital Market Authority approval, or demonstrating compliance with Saudi anti-money laundering regulations. It's particularly valuable during investment rounds, when partnering with international entities, or when regulatory authorities require enhanced verification of business relationships. Having it ready before these situations arise prevents delays and reduces exposure to compliance risks.

• Pre-Investment Due Diligence: Focuses on thorough financial and operational reviews before major investments, following Capital Market Authority guidelines
• Corporate Transaction Due Diligence: Covers mergers, acquisitions, and joint ventures with detailed verification procedures aligned with Saudi Companies Law
• Compliance Due Diligence: Emphasizes anti-money laundering checks and regulatory compliance under Saudi financial regulations
• Operational Due Diligence: Examines business partners' day-to-day operations, supply chain integrity, and management capabilities
• Technology Due Diligence: Evaluates IT systems, data protection measures, and digital infrastructure compliance with Saudi cybersecurity requirements

• Legal Departments: Draft and update Due Diligence Policies to align with Saudi regulations and company needs
• Board of Directors: Review and approve policies, ensuring alignment with corporate governance standards
• Compliance Officers: Implement and monitor adherence to the policy across operations
• Investment Teams: Execute due diligence procedures when evaluating new opportunities
• External Auditors: Verify policy implementation and effectiveness during regulatory reviews
• Business Development Teams: Apply policy requirements when vetting potential partners
• Risk Management Teams: Use the policy to assess and mitigate potential risks in new ventures

• Regulatory Review: Gather current Saudi anti-money laundering laws and Capital Market Authority requirements
• Risk Assessment: Map your organization's specific risk areas and transaction types
• Industry Standards: Research sector-specific due diligence requirements in Saudi Arabia
• Process Mapping: Document your existing verification procedures and approval workflows
• Stakeholder Input: Collect feedback from compliance, legal, and operations teams
• Technology Review: Evaluate available tools for conducting and documenting due diligence
• Documentation Framework: Create templates for recording findings and maintaining audit trails
• Implementation Plan: Develop training materials and rollout schedule for the new policy

• Policy Scope: Clear definition of activities and transactions requiring due diligence under Saudi law
• Legal Framework: References to relevant Saudi regulations, including Anti-Money Laundering Law and CMA requirements
• Risk Assessment Criteria: Specific parameters for evaluating business relationships and transactions
• Verification Procedures: Detailed steps for identity confirmation and background checks
• Documentation Requirements: List of mandatory records and retention periods
• Reporting Obligations: Procedures for internal and regulatory reporting
• Review Mechanisms: Timeline and process for policy updates and compliance reviews
• Authority Matrix: Clear delegation of approval powers and responsibilities

A Due Diligence Policy differs significantly from a Compliance Policy in both scope and application within Saudi Arabia's regulatory framework. While they're often mentioned together, they serve distinct purposes in corporate governance.

• Purpose and Focus: Due Diligence Policy outlines specific investigation and verification procedures for business transactions, while Compliance Policy covers broader regulatory adherence across all operations
• Timing of Application: Due Diligence Policy activates during specific events like mergers or partnerships, whereas Compliance Policy operates continuously
• Scope of Review: Due Diligence focuses on external parties and specific transactions, while Compliance covers internal operations and ongoing regulatory requirements
• Risk Management Approach: Due Diligence emphasizes preventive investigation before engagement, while Compliance maintains ongoing conformity with laws and regulations
• Documentation Requirements: Due Diligence requires specific transaction-related evidence, while Compliance needs broader operational records and regular audit trails