enhanced due diligence (EDD) is a risk based due diligence that allows companies to manage high-risk https://warpseq.com/ transactions and customers while still complying with regulations. When properly implemented enhanced due diligence can protect businesses from significant damage to reputation and legal sanctions while ensuring their Anti-Money Laundering and Customer Due Diligence procedures are effective in combating financial crimes.
EDDs are typically required when a particular transaction or customer is deemed high risk because of complex ownership structures or political risk. They could also be required when the customer is in a field that is prone to financial crime or laundering. A significant change in customer’s behavior such as an increase in the volume of transactions or new kinds of transactions may also require an EDD. In addition, any transaction that involves the region or country that is more prone to money laundering or terrorism financing requires an EDD.
EDD is focused on the identification of beneficial owners and uncovering potential risks that are not obvious, such as the true beneficiaries in a transaction or a account. It also identifies suspicious and unusual patterns of transactional behavior and validates the information using independent interviews and checks, as well as site visits, and third-party confirmation. A review of the local market’s reputation through media sources and current AML policies complete the risk assessment.
EDD is more than just an obligation to comply; it’s a vital part of protecting the integrity of the global finance system. Implementing effective EDD procedures is not just a matter to be complied with, it’s an investment in the security and safety of the global financial system.