Enhanced Due Diligence
Enhanced due diligence is an essential part of AML compliance for companies that deal with transactions of high value and/or customers who are susceptible to laundering money and other financial crime. It is used to identify the riskiest of clients and prevent them from donating to terrorist groups and other criminal groups.
While the standard customer due diligence is designed to verify a customer’s identity However, the EDD process is more comprehensive and requires a wider range of checks. These include obtaining more identification documents, carrying out rigorous verification of the IDs, and conducting thorough checks to verify the location of a customer or source of funds known business relationships, and other such things. Due diligence is often used on high-risk clients, for instance, politically-exposed individuals (PEPs) and those from high-risk countries, and businesses or individuals that rely heavily on cash.
The EDD process will be more comprehensive the more complex a person, legal entity or transaction is. Regulators typically prefer an approach based on risk that utilizes documented risk assessment guidelines to determine the amount of scrutiny required for each case. The EDD process includes gathering more detailed information including information about the person’s suppliers and customers, corporate/legal structures, and legal structures. EDD procedures are typically more expensive, time-consuming and demanding of more documentation than CDD procedures. It is important to have an identity verification system that’s both effective and efficient such as 1Kosmos BlockID to make the process more efficient for your company.
