Due Diligence and Ongoing Monitoring

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  • 1.  Loan Referral Broker/Company

    This message was posted by a user wishing to remain anonymous
    Posted 08-17-2023 01:03 PM
    This message was posted by a user wishing to remain anonymous

    For those who use an outside company who refers loans to your bank, what due diligence (DD) are you obtaining?  

    Are you having those vendors answer a questionnaire? 

    This is an ongoing issue with our bank and getting pushback from the vendor owners on requesting these types of vendors to complete the questionnaire (we use one master for all vendors) and not wanting to request DD documentation? 

  • 2.  RE: Loan Referral Broker/Company

    Posted 08-17-2023 02:10 PM

    We do obtain due diligence however, based on the nature of the relationship, we estimate the risk to be pretty low and therefore obtain a minimal about of due diligence.  Our due diligence requirements are specifically tied to the level and type of risk of the relationship.  We find that having a risk-based framework that matches the due diligence to the specific risks of a relationship is a model that gets more traction with business owners.  

    I would suggest looking at the specific risks of these kinds of relationships and then looking at your questionnaire and making sure the information you are asking for align to the risk.  Then frame your conversations with the business owners around that- these are the risks we see in the relationship and that is why we need to know this or ask for this.  That starategy has worked well for us.


    Shelly Chase
    VP Operational Risk