When a customer or business has a higher chance of being a victim of money laundering, terrorism financing, and other financial crimes, they require an additional level of due diligence. Also known as enhanced due diligence (EDD) which goes beyond the standard KYC and AML checks by gathering data beyond the scope of the standard checks.
This includes identifying individuals and organizations behind customers, such as the ultimate beneficial ownership (UBO), uncovering the true source for wealth as well as funds and business activity. It also investigates mysterious activities and transactions and investigates the underlying connections.
It’s an important tool in the fight against the financing of criminals and terrorists. It’s important to remember that EDD is a measure that should be utilized on a case by case basis. For instance for example, a UK bank account opening with a clear passport, solid address history and no CCJs may only require CDD, while another customer might require EDD due to the high quantity of cash deposits or complex transactions.
The best way to evaluate the need for EDD is to build a comprehensive risk assessment and screening framework. This should encompass both internal controls as well as external influences like negative media, political instability, sanctions, financing of terrorism as well as organized crime and fraud.
Effective due diligence doesn’t just mean complying with regulatory requirements or safeguarding your brand reputation; it’s about making a real impact on the fight against criminality in the world. You need an identity verification and EDD system that’s fast reliable, accurate, and cost-effective to accomplish this.
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