What Is Enhanced Due Diligence?

Due diligence is required when a customer or a business poses a greater risk of money laundering, terrorist financing and other financial crimes. Also known as enhanced due diligence (EDD) it goes beyond the standard KYC and AML checks by collecting information outside of the normal scope.

This involves identifying the people and entities behind your customers, including ultimate beneficial ownership (UBO), and uncovering the real source of wealth, funds and business activity. It also investigates unexplained transactions and actions and probes the root of the relationships.

It’s a crucial tool to fight criminal and terrorist funding. It’s important a paradigm shift in data security: the rise of VDRs to remember that EDD is a measure that should be used on a case by case basis. For instance, a bank account opening in the UK with an unclean passport, a solid address history, and no CCJs might only require CDD. But, another customer might require EDD because of an excessive amount of cash deposit or more complicated transactions.

The best way to determine the necessity for EDD is to establish an extensive risk assessment and screening framework. It should encompass both your internal controls as well as external factors such as adverse media as well as sanctions, political instability terrorist finance organized crime, fraud and money laundering.

Effective due diligence doesn’t mean only meeting regulatory requirements or protecting brand reputation. It’s about making an impact in the fight against global criminality. You require an identity verification and EDD system that is quick precise, reliable, and cost-effective to accomplish this.