What Is Enhanced Due Diligence?

If a business or customer is at a greater risk of money laundering, terrorist financing, or other financial crimes, they should be given an additional level of due diligence. Known as enhanced due diligence (EDD) This goes beyond the standard KYC and AML checks by gathering data outside of the normal scope.

This includes identifying the people and entities behind clients, such as the ultimate beneficial ownership (UBO) in revealing the source of wealth or funds, as well as business activities. It also probes underlying relationships and examines unresolved transactions and activities that may be a sign of hidden dangers.

It’s a crucial element in the fight against the funding of terrorists and criminals. It’s crucial to remember that EDD is a measure that should be utilized on a case by case basis. For instance, a bank account opening in the UK with a clean passport, a solid address history and no CCJs could only require CDD. However, a different customer could require EDD because of an abundance of cash deposit or complex transactions.

The best way to assess the necessity for EDD is to develop an entire risk assessment and screening framework. This should cover both your internal controls and external factors like negative media, political instability, sanctions as well as terrorism finance, organized crime, fraud and money laundering.

Ultimately, effective due diligence doesn’t just mean complying with regulatory requirements or safeguarding your brand reputation; it’s about having a significant impact in the fight offerings in modern digital rooms against global crime. To do that you require a speedy efficient, accurate and affordable identity verification and EDD solution.