Under almost any circumstances and in virtually any location, a due diligence investigation is a challenging undertaking. That’s especially true for investigations in Latin America. Today, the turbulent Latin American political climate and unsteady economic landscape continue to complicate international proceedings for many industries. In addition to the proverbial “mañana syndrome,” there are more challenging factors and current events that continue to create barriers to effective investigations, even with our extensive local resources.

Brazil is undergoing a major political upheaval as presidential impeachment proceedings bring the country to a virtual standstill. Many government and administrative offices and agencies that we consult for our investigations are paralyzed, awaiting a return to normalcy and the chance to regain their footing.  The country is also preparing to host the Summer Olympics (a major disruption, of course). And growing fears from the Zika virus are also hindering civic and economic activity.

These events can significantly lengthen the time it takes to complete investigations. Fortunately, however, we have incredible reach and resources to cover this vast and often complex country despite the many logistical challenges.

Following the last year of plummeting oil prices, Venezuela continues its startlingly rapid demise, characterized by severe food shortages, frequent power outages, and government-mandated shortened workweeks in futile attempts to save power. The country is moving closer and closer to total anarchy. Currently, there is even a shortage of paper, making it difficult to obtain basic and proper documentation in connection with our cases. Hospitals are seeing longer lines and can only take patients on an emergency basis. Even something as simple as obtaining an official death certificate is increasingly difficult. This is an open invitation to fraud because it makes it far easier to fabricate documents.  We urge our clients to underwrite or review every claim from Venezuela with utmost scrutiny.

In Panama, the recent distribution of the “Panama Papers” has uncovered a treasure trove of secret information regarding money laundering, banking secrecy laws, and the people involved in these activities. These papers provide an uncommon window into the systematic approach to hiding assets and laundering money in tax havens and through hidden loopholes.  Throughout Panama and the region, we are seeing an influx of Chinese immigration and underground businesses.  We continue to see elevated levels of fraudulent and criminal activity, which has become more difficult to detect due to the exposure of the Panama Papers and increased privacy laws and concerns.

In Mexico, we continue to see a growing number of problematic claims – either in the form of questionable deaths or questions regarding insurability at the time of the application.  We have found many cases where the insured was not present at the time of the application and others with unadmitted medical history.  We’re also continuing to see cartel activity, so our firsthand knowledge of Mexico’s complex legal system and in-depth understanding of how the government legally issues identification and documentation are valuable to our clients.  With our life-inspection process, we see applications for large policies with questionable businesses and personal identities.  In Mexico, the single most important piece of identification is the IFE, which is analogous to a U.S. Social Security number, and it is vital to have this when performing a background check in Mexico. Consistent criminal activity along the U.S. border also makes it very risky for our investigators to access reliable resources. In our opinion, the risk in conducting investigations in Mexico is higher than ever.

Outside of Latin America, Cuba is now open for business, which will allow us greater access to perform in-country investigations and provide better coverage to clients. While Diligence International has always maintained resources in Cuba, we will now have a more expansive footprint for greater coverage.

As always, Haiti remains a very challenging locale. It is one of the poorest countries in the world, showing little or no economic progress, and a destitute and desperate populace, making it prime territory for fraud.  Government officials and judges generate very limited income so it can be relatively easy (through inexpensive bribes) for fraudsters to secure any and all documentation required for a claim. In particular, we see more claims originating in Florida where the policy is allegedly purchased for an elderly person who usually passes away in Haiti shortly after the contestable period.  There is a high probability that the proposed insured was never actually in the U.S. and/or had unadmitted medical history.  Our Haiti team is well versed in these issues and all manner of due diligence.

This is just a brief glimpse of the current conditions in some of the most challenging areas of the world.  It is extremely important to recognize the difficulty in conducting investigations in these regions. More importantly, it’s essential to understand the need to perform a comprehensive investigation with enough redundancy to properly validate a claim.

Make it your best practice to partner with a team that has native, in-country resources and expertise, a team that speaks the local language, understands the culture and customs, and has a firm grasp on the legal environment. With managing partners in Mexico, Colombia, Haiti, and across Latin America, Diligence International Group has the highly skilled team of loyal, trustworthy investigators you need. Diligence International doesn’t merely work in Latin America. We live and work there every day.

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Fraud Trends 2016
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