31.10.25 Pre-Onboarding vs. Ongoing Due Diligence: A Real Case.

In today’s financial world, a one-time client check is never enough. A real example from our practice demonstrates why ongoing due diligence is not just a formality but a crucial tool for maintaining financial stability and preventing risks.

🎯 Pre-Onboarding: The First Step

A new client approached us — a financial merchant providing investment services. At the pre-onboarding stage, we conducted a comprehensive check, including:

Legal verification: reviewing registration documents and corporate charters.
Ownership and beneficiary review: analyzing public information and affiliated entities.
Financial due diligence: assessing financial statements, checking for debts, credit risks, and history.
AML/KYC audit: ensuring compliance with anti-money laundering and counter-terrorism financing regulations.
Reputational analysis: searching for negative information in open sources and specialized databases.

⚠️ Early Warning Signs

Initially, everything seemed normal: turnover was stable, and transactions were processed without issues. However, a few months later, our monitoring detected early warning signals:

The merchant requested a change of legal entity, moving registration to an offshore jurisdiction — Belize.
The actual owner was a nominee, and corporate structure changes were underway under the new controller.

🔍 Repeat Due Diligence Findings

We conducted a repeat due diligence review, which revealed:

The company was experiencing financial difficulties after the main beneficiary changed.
The new owner did not intend to fulfill obligations to clients and was likely preparing for potential defaults.
Using an offshore jurisdiction and nominee owners created additional barriers to accountability.

🛡️ Preventive Measures

At this stage, we implemented several preventive measures to protect our business and clients:

Transaction control: gradually reducing transaction volumes through our anti-fraud system.
Chargeback preparation: capturing screenshots of the merchant’s website, service terms, and investment policies.
Additional client verification: requiring users making large transactions to submit declarations acknowledging investment risks and confirming full awareness of potential losses.

📈 Results and Key Takeaways

Thanks to these measures:

We minimized the merchant’s turnover to nearly zero.
We had documented and technical evidence to defend against chargebacks.
We won over 95% of disputes, minimizing potential losses.

This case clearly demonstrates that pre-onboarding is only the first step. Business dynamics, ownership changes, legal restructuring, and strategic shifts introduce new risks that only ongoing monitoring can reveal.

💡 Conclusion

The takeaway for financial companies is simple but crucial: never relax after successful pre-onboarding. Ongoing due diligence is the key to protecting your business, reducing financial and reputational risks, and ensuring a high rate of successful resolution in potential disputes.