What Is Enhanced Due Diligence?

If a business or customer has a higher chance of being a victim of money laundering, terrorist financing, and other financial crimes, they must be subject to an increased degree of due diligence. Known as enhanced due diligence (EDD) This extends beyond the basic KYC and AML checks by gathering data beyond the scope of the standard checks.

This includes identifying the individuals and entities behind your customers, including ultimate beneficial ownership (UBO), and uncovering the source of wealth, funds and business activities. It also probes underlying relationships and examines unresolved transactions and actions that could indicate hidden risks.

It’s an important tool in the fight against criminal and terrorist funding. However it’s important to remember that EDD must be considered on an individual basis. For instance, a bank account opening in the UK with an unblemished passport, solid address history and no CCJs may only require CDD. But, another customer might require EDD because of an excessive amount of embracing cloud solutions for flexible operations cash deposit or more complicated transactions.

The best method to determine whether EDD is required is to create a comprehensive risk analysis and screening framework. That should cover both your internal controls as well as external factors such as negative media as well as political instability, sanctions, 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 making a difference in the fight against criminality in the world. You require an identity verification and EDD system that’s fast reliable, accurate, and cost-effective to accomplish this.