Every year, more than $2tn worth of illicit principle moments of data room provider comparison cash flows into the global financial system, despite the efforts of regulators and financial institutions to prevent money laundering and financing of terrorists. One way to tackle dirty money is with enhanced due diligence (EDD) that is a comprehensive know your customer (KYC) process that focuses on customers and transactions with greater risk of fraud.
EDD is regarded as a more thorough screening level than CDD and can contain more information requests, including sources and corporate appointments, funds and associations with companies or individuals. It often involves more thorough background checks, including media searches, in order to discover any publicly available evidence or reputational evidence of criminal activity or misconduct that could be a threat to the bank’s operations.
The regulatory bodies have guidelines on when EDD should be triggered. This is usually dependent upon the nature of the transaction or the customer, and also whether the person in question is politically exposed (PEP). It is the decision of each FI to decide if they want to include EDD to CDD.
The key is to formulate solid policies that make it clear to staff what EDD requires and what it doesn’t. This will help avoid high-risk scenarios that can result in substantial fines for fraud. It is also essential to have a thorough identity verification procedure which allows you to identify suspicious IP addresses, spoofing technologies and fake identities.
