Enhanced Due Diligence

enhanced due diligence (EDD) is a risk based due diligence that allows businesses to handle high-risk transactions and customers, while also ensuring compliance with the laws. When implemented correctly it protects companies from severe legal and reputational harm while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are effective in combating financial crime.

EDDs are usually required in cases where a transaction or a customer is deemed to be high risk because of complex ownership structures or political risk. They can also be required when the customer is involved in a field that is susceptible to financial crime or money laundering. In addition there is a significant shift in the behavior of a customer such as an increase in volume of transactions or a change in the type of transactions, may require an EDD. In addition, any transaction that involves a particular country or region with a higher risk of money-laundering and terrorism financing will require an EDD.

EDD is focused on identifying beneficial owners and uncovering potential risks that are not obvious, such as the true beneficiaries in the transaction or account. It also identifies unusual or suspicious patterns of transactional behavior and then validates the information using independent checks and interviews, website visits and third-party verification. A review of local market reputation through media sources and existing AML policies complete the risk assessment.

EDD is more than an obligation for compliance it’s a vital element in ensuring the integrity of the global financial system. Implementing EDD procedures that are effective is more than a current trends in digital room solutions matter for compliance. It’s an investment into the security and safety of the global financial system.