Definition:
Due diligence is the comprehensive investigation of a company or individual before entering into a business agreement to assess risks and ensure regulatory compliance.

Contextual Explanation:
In the payments industry, due diligence is crucial for verifying business partners, preventing fraud, and ensuring compliance with AML regulations. Paycompliance offers guidance on best practices for conducting thorough due diligence.

Why It Matters:
Failure to conduct due diligence can lead to partnerships with high-risk entities, regulatory penalties, and financial losses.