The next step in the five-step process is the questionnaire. The term ‘questionnaire’ is mentioned several times in the 2020 FCPA Resource Guide. It is generally recognized as one of the tools that a company should complete in its investigation to better understand with whom it is doing business. The questionnaire should be mandatory step for any third-party that desires to work with your company as it mandates the proposed business partner, commit to certain required information in writing prior to beginning the due diligence process. Remember if a third-party does not want to fill out the questionnaire or will not fill it out completely you should not walk but run away from doing business with such a party.

One of the key requirements of any successful compliance program is that a company must make an initial assessment of a proposed third-party. The size of a company does not matter as small businesses can face quite significant risks and will need more extensive procedures than other businesses facing limited risks. The level of risk that companies face will also vary with the type and nature of the third-parties with which it may have business relationships. For example, a company that properly assesses that there is no risk of bribery on the part of one group of its third-parties will require nothing in the way of procedures to prevent bribery in the context of those relationships. By the same token the bribery risks associated with reliance on a third-party agent representing a company in negotiations with foreign government officials may be assessed as significant and, accordingly, requires much more in the way of procedures to mitigate those risks.

The questionnaire fills several key roles in your overall management of third-parties. Obviously, it provides key information that you need to know about who you are doing business with and whether they have the capabilities to fulfill your commercial needs. Just as important is what is said if the questionnaire is not completed or is only partially completed, such as the lack of awareness of the FCPA, U.K. Bribery Act or anti-corruption/anti-bribery programs generally. Lastly, the information provided (or not provided) in the questionnaire will assist you in determining what level of due diligence to perform.

Three key takeaways:

  1. You must have enough information to fully identify the owners, UBOs and related parties to determine if there is foreign official involvement.
  2. All commentary on best practices compliance programs requires questionnaires.
  3. If a third-party refuses to fully respond to your questionnaire, run, don’t walk away from the proposed relationship.