As the world continues to become increasingly riskier, anti-money washing (AML) and other compliance steps need to progress as well. Increased due diligence (EDD) is certainly an advanced standard of KYC that dives more deeply into determining high-risk consumers, transactions and business associations. It goes beyond the standard id verification and risk diagnosis steps of Customer Due Diligence (CDD), to include extra checks, exacting monitoring processes and more.
Unlike CDD, which is typically accomplished prior to outset a business relationship and can typically be automated, EDD can be triggered by specific people, businesses, industries or countries that present a greater likelihood of money washing or various fraud. During EDD, the info collected much more in-depth and may consist of screening meant for financial criminal risks like sanctions lists, adverse marketing reviews and more.
When to Use Enhanced Due Diligence
Whilst CDD can be described as critical AML requirement for all of the companies, it could be difficult to identify red flags meant for high-risk persons and businesses. That’s why EDD is used to screen for much more complex risk indicators, such as PEPs and their close co-workers and members of the family. It’s as well used to perform safeguarding sensitive information with advanced encryption detailed research in people or entities who experience a history of economic crime, such as criminal activity, tax evasion, corruption and terrorism.
It’s also accustomed to review the organization background of an business, including the details of its management group and maximum beneficial owners (UBOs), and also reviewing business documents meant for red flags. If you want to perform EDD, it’s crucial to understand the risks and how to do it proper.