Counterparty Due Diligence

Counterparty due diligence helps answer a practical question before commitment: do the identity, ownership, history and capabilities of the other party stand up to independent scrutiny, and are there risks that should be understood or resolved before proceeding?

Business due diligence is particularly useful where the legal entity, beneficial ownership, operating substance or track record of a proposed counterparty matters to the decision.

Start with the counterparty you are actually dealing with

Trading names, group structures and special-purpose companies can make a relationship appear simpler than it is. The first task is to establish the correct legal entity, the relevant decision-makers and the people or organisations that own or control it.

EU beneficial ownership needs more than an open-register check

EU privacy case law has moved beneficial-ownership access away from unconditional publication to a controlled model in which access may depend on status or legitimate interest. The identification problem has not disappeared: counterparties, regulated firms and other decision-makers may still need to understand who ultimately owns or controls an entity.

For EU-linked counterparties, Carratu can reconstruct ownership and control across available corporate records, historical filings, connected entities and independent sources; test declared information for inconsistencies; and distinguish registered ownership from wider indicators of ultimate control. Access to restricted register information always depends on the applicable national rules and the client's or applicant's legal basis. Beneficial ownership, privacy and EU due diligence

What we examine

• Legal and trading identity, incorporation history and current status.
• Directors, owners, persons with significant control and relevant connected entities.
• Previous companies, changes of name and material corporate continuity.
• Trading footprint, addresses, websites and claims about scale, capability or longevity.
• Insolvency, disputes, enforcement, adverse information and other material risk indicators.
• Sanctions and ownership/control considerations where relevant to the instruction.

Claims should be tested, not merely collected

A due diligence file is more useful when it asks whether key representations are supported. Examples include claimed years in business, named clients or projects, management experience, ownership, geographic presence and the history of a supposedly established group. Where a claim cannot be independently substantiated, the report should say so without turning absence of evidence into an allegation.

Priorities for enhanced review

Opaque ownership, unexplained corporate changes, an unusually thin operational footprint, inconsistencies between records and promotional material, adverse information or links to higher-risk jurisdictions can all justify a more detailed review. In those circumstances the instruction can move into enhanced due diligence rather than expanding every counterparty check by default.

A report designed for a decision

The deliverable is a referenced counterparty assessment covering the legal entity, ownership, business history and material representations relevant to the proposed relationship. Findings distinguish verified information, discrepancies and specific points to resolve before commitment.

Read the practical counterparty due diligence guide for questions to consider before commitment.