Enhanced due diligence is a due diligence based on risk procedure that allows businesses to effectively manage transactions and customers with high risk while remaining compliant with the regulations. If properly implemented, enhanced due diligence shields businesses from significant reputational and legal penalties while ensuring their Anti-Money Laundering and Customer Due Diligence processes are effective at combating financial crimes.
Often, EDD is required when a customer or transaction is deemed high-risk due to complex ownership structures, political exposure or involvement in industries susceptible to money laundering or financial criminality. Additionally any significant change in customer behavior for example, an increase in volume of transactions or a change in the type of transactions could require an EDD. In addition, any transaction that involves any region or country that is more prone to terrorist financing and money laundering requires an EDD.
EDD concentrates on the identification of beneficial owners, and uncovers hidden dangers, like the true beneficiaries of a transaction or account. It also detects unusual and suspicious patterns of transactions and validates the information using independent interviews and checks, website visits and third-party verification. The risk assessment is carried out by a thorough examination of the local market’s reputation, based on media sources, as well as an existing AML policy.
EDD is more than a requirement to ensure compliance it’s a vital element in ensuring the integrity of the global financial system. Implementing efficient EDD procedures is not only a matter of compliance, it’s https://warpseq.com/why-the-best-data-room-services-can-not-help-your-business/ an investment in the safety and security of the global financial system.