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# The Importance of Due Diligence in Financial Transactions in Chile
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As the financial landscape becomes increasingly complex, companies operating in Chile must prioritize due diligence procedures when conducting business with suppliers. This critical step involves investigating a supplier's behavior before establishing a contractual relationship to identify and mitigate potential risks.

## The Importance of Effective Due Diligence

Despite the growing importance of due diligence, many companies fail to effectively implement these procedures, relegating them to mere compliance exercises. However, international organizations and local best practices have identified key elements for successful due diligence, enabling businesses to proactively manage risk and ensure sustainable development.

### Essential Factors to Consider in Due Diligence

Here are some essential factors to consider when conducting effective due diligence:

* **Identifying Various Possible Impacts**: A comprehensive analysis of risks is crucial, taking into account legal, regulatory, environmental, reputational, financial, and other potential consequences.
* **Evaluating Suppliers Based on Their Activities**: Assessing the supplier's line of business and activities can help prioritize risks and ensure adequate control measures are in place.
* **Defining Evaluation Standards**: Applying the same standards to suppliers as those used internally strengthens corporate culture and promotes responsible business conduct.
* **Identifying Conflicts of Interest**: Recognizing potential or real conflicts of interest is essential to avoid legal and reputational damage.
* **Periodic Monitoring**: Regular review of suppliers ensures ongoing risk assessment and adaptation to changing circumstances, such as new technologies or regulatory changes.

### Benefits of Effective Due Diligence

By incorporating these elements into due diligence procedures, companies can effectively identify and manage risks, ultimately contributing to a more sustainable financial market in Chile.

## For Further Information or Guidance

For further information or guidance on implementing effective due diligence processes, please contact:

* **Francesca Franzani**, Compliance Group Director
* **Jaime Viveros**, Compliance Group Associate
* **Cesar Robledo**, Compliance Group Associate
* **Felipe Santiago**, Group Compliance Attorney