Enhanced Due Diligence

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Enhanced due diligence is a due diligence based on risk procedure that allows businesses to effectively handle high-risk customers and transactions while still adhering to the regulatory requirements. If properly implemented, it protects businesses from severe reputational and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are efficient in combating financial crime.

EDDs are often required in cases where a transaction or a customer is classified as high-risk due to complicated ownership structures or political risk. They may also be required when the customer is in an industry that is prone to financial crime or money laundering. Additionally there is a significant change in customer behavior, such as an increase in transaction volume or unfamiliar types of transactions, may require an EDD. Finally, any transaction that involves a country or region with higher risks of money laundering and financing terrorism will require an EDD.

EDD focuses on identifying beneficial owners, revealing hidden risk factors such as the real beneficiaries of a particular account or transaction. It also detects unusual or suspicious patterns of transactional behavior and verifies information through independent checks and interviews, website visits, and third-party verification. The risk assessment is carried out by a review of the local market reputation via media sources, as well as the current AML policy.

EDD is more than a requirement to ensure compliance It’s an essential part safeguarding the integrity of the global finance system. Implementing effective EDD procedures is not just about compliance; it’s an investment in the security and safety of the global financial system.