Due diligence is required when a client or a business has a greater risk of money laundering, terrorist financing, and other financial crimes. Also known as enhanced due diligence (EDD) This extends beyond the basic KYC and AML checks by gathering data outside the scope of normal KYC and AML.
This involves identifying the people and entities that are behind your customers, like ultimate beneficial ownership (UBO) and identifying the source of wealth, money and business activity. It also investigates mysterious transactions and actions, and probes underlying relationships.
It’s an important tool in the fight against criminal and terrorist financing. However it’s important to remember that EDD must be considered on an individual basis. For trends of virtual data room solutions instance, an account opening in the UK with a clean passport, a solid address history and no CCJs could only require CDD. However, a different client could require EDD because of the high volume of cash deposits or complicated transactions.
The best way to evaluate the necessity for EDD is to build a comprehensive risk assessment and screening framework. This should include both your internal controls and external factors such as negative media as well as sanctions, political instability terrorist finance organized crime, fraud and money laundering.
Effective due diligence isn’t simply meeting regulatory requirements, or protecting brand reputation. It’s about having a real impact in the fight against global criminality. To accomplish that, you need a fast, accurate and cost-effective identity verification and EDD solution.
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