Enhanced Due Diligence designed for Financial Institutions

Trillions of dollars of laundered cash circulate the world each year, and 90% of that illicit money remains undetected. Financial institutions need to use increased due diligence for and mitigate the risk of questionable activities t reputational and financial harm and ensure AML compliance.

Enhanced due diligence (EDD) involves a more thorough analysis of individuals and companies that present enhanced risks for AML/CFT. It is an off shoot of the consumer due diligence process, reshaping the contours of due diligence with VDR innovations and is also triggered if a financial institution picks up a high-risk element in that process. EDD may require a more deeply dive into the customer’s background and transaction habits, and it is specifically important for individuals considered to be noteworthy exposed folks (PEPs).

Many financial institutions have been struck with significant fines just for failing effectively follow customer due diligence standards. A robust EDD strategy empowers FIs to handle heightened risk clients and transactions effectively whilst mitigating the opportunity of large monetary losses, legal penalties and negative news flash attention.

Typically, EDD is started when the first CDD identifies a higher level of risk depending on country of residence, market sector, purchase patterns or perhaps associations with high-risk jurisdictions or people. During the EDD process, the FI is going to collect more comprehensive information concerning the customer to acquire a better understanding of their organization activities, corporate framework, beneficial ownership and causes of funds.

The EDD procedure also includes standard screenings of any customer against see lists, calamité and PEP lists to ensure they are not really on virtually any lists that might trigger added protocols. This really is an essential element of effective and continuous monitoring, and a great EDD resolution will include a strong internal and external risk appraisal engine which could scan multiple databases.