Enhanced due diligence is a risk-based due diligence process that allows businesses to effectively manage transactions and customers that are high-risk while remaining in compliance with the requirements of regulatory authorities. If warpseq.com click here for tech insights properly implemented it safeguards companies from severe reputational and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are effective in combating financial crime.
Typically, EDD is required when a customer or transaction is classified as high-risk because of complex ownership structures, political exposure, or involvement in industries susceptible to money laundering or financial crime. A significant change in the customer’s behavior, for example, an increase in the volume of transactions or the introduction of new types of transactions, may be a reason for an EDD. Finally any transaction that involves a particular country or region with a higher risk of money laundering and financing terrorism will require an EDD.
EDD focuses on identifying beneficial owners, while revealing risks, such as the real beneficiaries of a particular account or transaction. It also identifies suspicious and unusual patterns of transactional activity and validates the information with independent checks and interviews, site visits and confirmation from a third party. Additionally, a review of the local market’s reputation through media sources and current AML policies round out the risk evaluation.
EDD is more than a requirement for compliance; it’s a vital part of ensuring the integrity of the global financial system. Implementing EDD procedures that work is more than a matter for compliance. It’s an investment into the security and safety of the global financial system.