Doing Due Diligence on Offshore Service Providers In today's global economy, it is becoming more common to employ service providers in foreign jurisdictions. The difficulty is that we are often unfamiliar with these offshore service providers and tend to enter blindly into relationships with them. As such, it is prudent to do a certain degree of due diligence prior to engaging the services of a particular offshore firm or individual. There are many stories of people being taken advantage of in large part because they failed to adequately screen their offshore service provider. As confidentiality is an important element to offshore business, often times people are reluctant to make inquires about offshore service providers. Listed below are some suggestions that you may wish to consider before engaging the services of any offshore service provider. Domestic referrals It is often wise to engage the services of a domestic professional to assist in choosing an offshore service provider. Many domestic professionals with expertise in international transactions have a well-developed network of reputable professionals with whom they deal with on a continuous basis. Many of these domestic professionals have forged alliances and associations with different service providers in various offshore jurisdictions. This is usually the case when dealing with domestic lawyers and accountants. Banks also have a network of professionals who usually work in foreign subsidiaries. Reputable Jurisdiction If, for whatever reason, one prefers not to consult a domestic professional, the next best thing is to retain the services of an offshore service provider from a reputable jurisdiction, that is, a jurisdiction that has high standards for professionals and institutions providing services within their borders. Government Agencies Reputable jurisdictions usually require offshore service providers to be licensed by a government authority in order to provide their services. Since such licensing is normally a matter of public record, one can make enquires with respective government agency to determine if, in fact, the proposed advisor is licensed to provide those services for which they are being retained and that no warnings or complaints have been issued. Many jurisdictions have high licensing standards for professionals and corporations in order to promote their high standards as an offshore finance centre. So, where possible, only deal with those jurisdictions which require offshore service providers to be licensed and then deal only with offshore service providers that are, in fact, licensed to provide the service required. Insurance Confirm with your proposed offshore service provider that he has errors and omissions insurance or is insured against fraud. If the unfortunate should occur, you may then have recourse to an insurance fund. Also, remember to find out which insurance company is providing the insurance it is not uncommon for offshore service providers to set up their own insurance company. Professional References Request professional references of your offshore service provider. A reference from their bank, lawyer or accountant is desirable. Bear in mind, however, that financial institutions are plentiful offshore. Needless to say, a professional reference is only as good as the institution standing behind it. Organizations and associations Trade organizations are another good source of information about a specific offshore service provider, especially if the association such as local Bar Associations, has established professional competency criteria. Contact these organizations to see if your offshore service provider is a member. Magazines and Other Publications Check magazines, books and internet publications that deal with the offshore finance industry, they often publish due diligence directories. Field of Expertise Discuss with you proposed offshore service provider his areas of expertise and experience and if you require further services beyond the expertise of your existing service provider ask for a referral. Conclusion There are no sure things in life and the hiring of an offshore professional is no exception. The risks and surprises can be limited, however, by verifying the background, integrity and credentials of a prospective offshore service provider. We at M.J. O'Nions International Finance Lawyers do a thorough due diligence check on the offshore service providers we retained on behalf of our clients. Our clients can be assured that we only retain the services of reputable law firms with high standards of competency and professionalism.

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