US companies should be screening all non-US parties involved in cross-border business transactions and in foreign investment in the United States. Proper due diligence screening of transactions will provide assurance that the participation of the non-US parties does not raise concerns of:
- corrupt activities under the Foreign Corrupt Practices Act;
- money laundering or other support of terrorist activities;
- export controls compliance; and
- foreign government ownership, which may be an issue in the context of certain transactions in defense, communications, transportation, energy and high tech industries
Each of these areas may be addressed in a preliminary questionnaire to be completed by all non-US parties to the transaction. The answers can then be screened using one of the many commercially available screening services.
In addition to screening the parties to the transaction, the transaction documents should include representations and warranties from the non-US parties as to the accuracy and completeness of their questionnaire responses and their compliance with pertinent US laws and regulations. Every transaction is different and transactional documents need to be carefully tailored to the transaction and the questionnaire responses.