Due Diligence Pack
A due diligence pack is the set of documents a seller assembles so a buyer can verify what a licensed entity actually is — its corporate record, its permission, its compliance programme and its money. It is evidence, not marketing, and how good it is tells a buyer most of what they need to know.
Also called: DD pack · due diligence information packet
A due diligence pack is the bundle a seller puts together at the start of a transaction so the other side can check the business against documents rather than assertions. In a licence or company acquisition it typically runs to corporate records and the share register, the registration or authorisation itself with the regulator’s correspondence, the AML programme and its independent review, KYC files and transaction samples, audited or management accounts, banking relationships, material contracts, and any litigation or enforcement history.
Its job is verification. A buyer of a Canadian MSB or a Swiss SRO company is not buying a trading business so much as a permission, a clean history and a set of relationships, and each of those three exists only as paper. The pack is where the paper is.
It is also a diagnostic in its own right. A seller who can produce the last two independent AML reviews, the regulator’s acknowledgement letters and a complete register of directors within a week is running the business in a way that will survive a change of control application. One who cannot is telling the buyer something about the business that no warranty will fix, because the same gaps will appear in front of the regulator a few months later.
In practice
A pack proves what is on paper. It does not prove that the permission covers what the buyer intends to do with it, that the banking relationships will survive new ownership, or that the regulator will approve the transfer. Those are separate enquiries, and each has sunk a deal that had a complete pack.
Example
A buyer receives a 40-document pack for an EU payment institution. Everything is present except the last independent AML review and the regulator's most recent supervisory letter. Both turn out to exist; both record findings that were open at the time of sale. Nothing in the pack was false — the omission was the finding.
Commonly confused with
| Term | How it differs |
|---|---|
| Data room | A data room is where the pack is hosted and access is controlled. The pack is what is in it; a well-run data room with a thin pack is still a thin pack. |
| Customer Due Diligence | Customer due diligence is what a regulated firm does on its own customers under AML rules. A due diligence pack is what a seller gives a buyer in a corporate transaction. |
| Term Sheet | A term sheet records what the parties have agreed commercially. The pack is the evidence a buyer reads before deciding whether those terms are still worth signing. |
See also
- Term SheetA term sheet is a short document recording the commercial shape of a deal — price, structure, conditions, timetable — before anybody spends money on definitive contracts. Most of it is deliberately not binding; a few clauses in it always are.
- Change of ControlA change of control is a transaction that shifts ownership or control of a licensed entity past a regulatory threshold. It must be cleared with the regulator before completion, by approval in some regimes and by the regulator not objecting within a set assessment window in others. What is assessed is the incoming owners, not the deal.
- Control PersonAn individual or entity whose ownership stake in, or authority over, a licensee is large enough to require regulatory disclosure, fingerprinting and background checks. Control usually arises from a threshold ownership percentage or from holding an officer or director position.
- Enhanced Due DiligenceEnhanced due diligence, or EDD, is the additional scrutiny applied where money laundering risk is higher. In the UK and the EU it is mandatory in prescribed cases — politically exposed persons, high-risk countries, correspondent banking — as well as wherever a firm’s own risk assessment says the baseline is not enough.
- Know Your BusinessKnow Your Business, or KYB, is the verification of a corporate customer rather than an individual: that the entity legally exists, who owns and controls it, and what it actually does. It is the corporate counterpart to KYC, and the ownership chain is the hard part.