What Is Enhanced Due Diligence?

If a business or a client poses a higher risk of money laundering, terrorist financing, or other financial crimes, they need an extra degree of due diligence. This is known as enhanced due diligence which goes above and beyond the standard KYC/AML checks to gather details that are not in the normal scope.

This involves identifying the people and organizations behind customers, such as the ultimate beneficial ownership (UBO) to discover the real source of wealth as well as funds and business activities. It also probes underlying relationships and investigates suspicious transactions and actions that could be a sign of hidden dangers.

It’s a crucial element in fighting terror and criminal funding. However, it’s important to note that EDD should be analyzed on an individual basis. For instance, an account opening in the UK with an unclean passport, a solid address history and no CCJs may only require CDD. However, a different customer might require EDD because of an excessive amount of cash deposit or complex transactions.

The best way to determine if EDD is necessary is to establish a comprehensive risk analysis and screening framework. It should encompass your internal controls as well as external factors like adverse media as well as sanctions, political instability and terrorism finance, organized crime, fraud and money laundering.

Effective due diligence isn’t about only meeting regulatory requirements or preserving brand reputation. It’s about having an impact in the fight against global criminality. To accomplish this you require Board Software a quick accurate, reliable and cost-effective identity verification and EDD solution.