What Is Enhanced Due Diligence?

Due diligence is required when a person or a business poses a greater risk of money laundering, terrorist financing and other financial crimes. Known as enhanced due diligence (EDD), this goes beyond the standard KYC and AML checks by gathering information outside of the basic scope.

This includes identifying individuals and organizations behind customers, such https://warpseq.com/virtual-data-room-pricing-what-you-need-to-know/ as the ultimate beneficial ownership (UBO), uncovering the source of wealth as well as funds and business activities. It also investigates illogical transactions and activities and probes the root of the relationships.

It’s a key component in the fight against criminal and terrorist funding. However it’s important to remember that EDD is to be applied on a case-by-case basis. For instance, an account opening in the UK with an unblemished passport, solid address history and no CCJs may only require CDD. However, a different client might require EDD due to an excessive amount of cash deposits or complicated transactions.

The best way to evaluate the need for EDD is to develop an entire risk assessment and screening framework. This should include both internal controls as well as external factors like negative media, political instability, sanctions, terrorism financing, organized crime and fraud.

Effective due diligence doesn’t just mean meeting regulatory requirements or protecting your brand reputation; it’s about making a real impact in the fight against worldwide crime. You need an identity verification and EDD system that is quick, accurate, and cost-effective to accomplish this.