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A Due Diligence Policy sets clear rules and steps for investigating business partners, investments, and transactions before making major decisions. In the Philippines, organizations use these policies to protect themselves from fraud, money laundering, and regulatory violations under the Anti-Money Laundering Act and Securities Regulation Code.

The policy typically outlines specific checks required for different situations - from verifying a supplier's credentials to investigating potential merger targets. It helps Filipino companies document their risk assessment process, meet BSP compliance requirements, and demonstrate good corporate governance. Most importantly, it gives staff a practical roadmap for conducting thorough background research and risk evaluations.

Use a Due Diligence Policy when entering high-stakes business relationships in the Philippines - especially before mergers, major investments, or partnerships with new suppliers. It's essential when dealing with transactions that fall under BSP oversight or when your organization faces heightened scrutiny from regulators.

The policy becomes particularly valuable during corporate expansions, when vetting potential board members, or before signing significant contracts. Filipino companies also rely on it when exploring overseas partnerships, acquiring property, or engaging with sectors that carry money laundering risks. Having this policy ready before these situations arise helps prevent rushed decisions and costly mistakes.

• Basic compliance-focused policies concentrate on regulatory requirements set by BSP and SEC, especially for financial institutions and listed companies
• Industry-specific policies adapt to unique risks - banking policies emphasize anti-money laundering, while manufacturing ones focus on supply chain verification
• Transaction-based policies detail procedures for specific deals like mergers or real estate purchases
• Comprehensive enterprise policies cover all business relationships, from vendor screening to investment evaluation
• Risk-tiered policies establish different levels of scrutiny based on transaction size, partner location, or industry risk level

• Corporate Legal Teams: Draft and update Due Diligence Policies, ensuring alignment with Philippine regulations and company risk profiles
• Board of Directors: Approve policy frameworks and oversee implementation across the organization
• Compliance Officers: Implement daily procedures, maintain documentation, and coordinate with BSP regulators
• Department Managers: Apply policy requirements when evaluating new business relationships or transactions
• External Auditors: Review policy effectiveness and verify compliance during annual assessments
• Business Partners: Submit required documentation and cooperate with due diligence investigations

• Industry Assessment: Map out your organization's specific risks and regulatory obligations under Philippine law
• Current Procedures: Document existing due diligence practices and identify gaps in compliance
• Stakeholder Input: Gather requirements from legal, compliance, and operations teams
• Risk Thresholds: Define transaction values and relationship types that trigger different levels of scrutiny
• Documentation Rules: List required records and verification steps for BSP compliance
• Implementation Plan: Create training materials and assign roles for policy execution
• Review Process: Establish timeline for regular policy updates and effectiveness assessments

• Purpose Statement: Clear objectives aligned with Philippine anti-money laundering and securities regulations
• Scope Definition: Specific transactions, relationships, and business activities covered by the policy
• Risk Categories: Detailed classification of high, medium, and low-risk activities
• Investigation Steps: Required verification procedures for each risk level
• Documentation Rules: Record-keeping requirements that satisfy BSP guidelines
• Reporting Protocols: Internal approval processes and regulatory filing procedures
• Review Schedule: Timeframes for policy updates and compliance assessments
• Enforcement Measures: Consequences for non-compliance and remediation steps

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 Philippine business operations.

• Framework vs. Tool: The Policy establishes your organization's overall approach to investigating business relationships, while the Checklist is the practical tool used to execute specific reviews
• Permanence: Policies remain relatively stable and require board approval for changes, while Checklists can be modified to fit different transaction types
• Legal Weight: The Policy carries more formal authority and demonstrates regulatory compliance to BSP, while Checklists serve as evidence that the policy was followed
• Content Focus: Policies outline principles, responsibilities, and procedures, while Checklists provide specific items to verify during investigations