Enhanced Due Diligence

Enhanced due diligence (EDD) is a risk based due diligence process that permits businesses to handle high-risk transactions and customers while remaining compliant with the laws. When implemented correctly enhanced due diligence can protect businesses against significant legal penalties and reputational damages while ensuring that their Anti-Money Laundering and Customer Due Diligence procedures are effective in combating financial crimes.

In most cases, EDD is required when the transaction or customer is deemed to be high-risk because of complex ownership structures, political exposure or involvement in industries prone to money laundering or financial crime. A significant change in customer’s behavior, for example, an increase in the volume of transactions, or the creation of new types of transactions may be a reason for an EDD. In addition any transaction that involves a country or region with a higher risk of money laundering and financing terrorism is likely to require an EDD.

EDD focuses on the identification of beneficial owners, while revealing risk factors such as the real beneficiaries of a bank account or transaction. It also identifies unusual or suspicious patterns in transactional behaviour, and confirms the https://warpseq.com/principle-moments-of-data-room-provider-comparison/ information through independent checks, interviews, site visits, and third-party verification. The risk assessment is carried out by a thorough review of the local market’s reputation using media sources, and existing AML policy.

EDD is more than an obligation to comply and is a crucial element of protecting the integrity of the global finance system. Implementing EDD procedures that are effective is not just an issue of compliance. It’s an investment in the safety and security the global financial system.