enhanced due diligence (EDD) is a risk based due diligence process that permits companies to manage high-risk transaction and customers, while also ensuring compliance with the regulations. When implemented correctly, it protects businesses from significant legal and reputational harm while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) processes are effective in combating financial criminality.
Often, EDD is required when the transaction or customer is classified as high-risk due to complicated ownership structures, political exposure, or involvement in industries susceptible to money laundering or financial criminal activity. Additionally any significant change in customer behavior like an increase in transaction volume or a change in the type of transactions might require an EDD. Finally any transaction that involves a particular country or region with higher risks of money laundering or financing for terrorism will require an EDD.
EDD concentrates on identifying beneficial owners, and limitations of top digital storage services uncovers hidden risk factors, including the real beneficiaries of a bank account or transaction. It also identifies unusual and suspicious patterns of behavior in transactions and verifies the information through independent checks and interviews, site visits and third-party confirmation. The risk assessment is completed through a review of local market’s reputation using media sources, as well as the current AML policy.
EDD isn’t only a regulation requirement; it’s an essential component of safeguarding the integrity of global financial system. Implementing EDD procedures that work is more than just an issue of compliance. It’s an investment into the safety and security the global financial system.
