When doing business in Ecuador, managing your business risks with due diligence is essential to achieving success.
Entrepreneurship in a new market entails facing different barriers. These include linguistic or cultural barriers, as well as lack of local market understanding or know-how. Buying existing companies or partnering with locals are key ways to mitigate these challenges and obtain support for navigating an unfamiliar market.
However, it is essential to protect yourself in Ecuador by conducting exhaustive due diligence controls on the companies and people your business works with. This process minimizes the risk in a transaction by conducting detailed and independent analyses.
Here we outline information about due diligence in Ecuador and how to manage your commercial risks.
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Due diligence to prevent money laundering in Ecuador
The Financial and Economic Analysis Unit of Ecuador defines due diligence as developing a set of actions, in the most efficient and diligent way possible, to adequately know your clients. As a result, your company can know who, due to their activity or condition, is more likely to conduct money laundering, finance terrorism or be part of other crimes.
As a new investor in the country, it is important to take into account the sector that you enter. The regulatory body of the sector is the one in charge of reviewing procedures for preventing money laundering locally.
Why is it important to conduct due diligence in Ecuador?
Incorporating a company and doing business in Ecuador, as in many other countries, can be complicated and follows a very bureaucratic process.
It is important to highlight that all information is not public knowledge and that specific search procedures are necessary to obtain the desired information. As such, recommendations suggest that local professionals conduct the information search. They should have knowledge of where to access the most important data for detailed information of the subject you selected to verify. Subjects or “targets” for this verification may include possible suppliers, possible clients or partners, whether these are people or companies.
If the objective is to invest in a company that already exists in Ecuador, due diligence analyses should mainly include financial and tax compliance data, as well as analyzing growth and possible debts with the state.
Results of a due diligence review
After collecting customer/company information, the due diligence group must provide reports of the results, which should include risk assessments. Once this information is provided, the interested party can decide how to proceed with the verified partnership.
A full due diligence review will ensure a safer development of the business relationship between the parties involved. This activity also significantly reduces the company’s risk profile and enables its executives to make informed decisions.
Get support to carry out due diligence in Ecuador with Biz Latin Hub
If your goal is to protect your company from potential business risks by applying due diligence procedures, it is important to work hand in hand with local experts.
In Ecuador, our team at Biz Latin Hub has personnel trained exclusively in background checks or due diligence prior to the implementation of new businesses in different industries.
Contact us if you are interested in learning more about this topic and would like advice according to your needs and expectations. We are happy to assist you with personalized services focused on solving your possible conflicts and maximizing benefits.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.