Due Diligence Questionnaire (DDQ)

A DDQ is a data-gathering tool. Rather than interviewing a counterparty, the reviewing firm sends a form and compares the answers with what it already knows. Questions usually cover ownership, licences, the countries and products involved, policies on money laundering and sanctions, and whether the firm has faced enforcement action. In correspondent banking the form is often a standard one, called a CBDDQ or, in some markets, a financial crimes compliance questionnaire (FCCQ), so that a respondent bank can answer once and share the result with many partners. The answers are evidence, not proof. Reviewers check them against public information and follow up on gaps or vague replies. Outside banking, the same device is used for suppliers, agents and investment managers. Reviewers who file the form without testing the replies have collected paperwork, not assurance.

A pharmaceutical manufacturer sends a questionnaire to a prospective distributor in another country. The reply says no government officials are involved in the business, yet the company registry lists the brother of a regional health minister as a director. The compliance officer asks for a written explanation and pauses the contract until the legal team has reviewed it.