Enhanced due diligence is a due diligence based on risk procedure that allows businesses to effectively handle high-risk customers and transactions while remaining in compliance with the regulatory requirements. When implemented correctly it shields businesses from severe legal penalties and reputational damage while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are efficient in combating financial criminality.
EDDs are typically required when a transaction or customer is classified as high risk because of complex ownership structures or political exposure. They can also be required if the customer is involved in an industry susceptible to financial crime or laundering. A significant change in the customer’s behavior, like an increase in volume of transactions or the introduction of new types of transactions, may be a reason for an EDD. In addition, any transaction that involves any region or country that poses higher risks of terrorist financing and money laundering requires an EDD.
EDD focuses on identifying beneficial owners and uncovering hidden risks such as the true beneficiaries in the transaction or account. It also detects suspicious and unusual patterns of transactions and validates the information using independent checks and interviews, site visits and third-party verification. A examination of the local market’s reputation through media sources and current AML policies complete the risk evaluation.
EDD is more than a requirement to ensure compliance and is a crucial element in ensuring the integrity of the global financial system. Implementing efficient EDD procedures read post here warpseq.com is not just a matter to be complied with, it’s an investment in the security and safety of the global financial system.