safeguarding sensitive information with advanced encryption
Enhanced due diligence (EDD) is a risk based due diligence method that allows businesses to handle high-risk transactions and customers while still complying with regulations. When properly implemented it safeguards businesses from serious consequences for reputational damage and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) processes are efficient in combating financial crime.
In most cases, EDD is required when a customer or transaction is classified as high-risk because of complex ownership structures, political exposure or involvement in industries that are susceptible to money laundering or financial criminality. In addition any significant shift in the behavior of a customer, such as an increase in the volume of transactions or a change in the type of transactions, may require an EDD. Additionally any transaction that involves a country or region that is more susceptible to money laundering and financing terrorism will require an EDD.
EDD is focused on the identification of beneficial owners and uncovering potential risks that are not obvious, such as the true beneficiaries in the transaction or account. It also detects unusual or suspicious patterns in transactional behavior, and validates information with independent checks and interviews, website visits, and third-party verification. In addition, a review of the local market’s reputation via media sources and the existing AML policies are also part of the risk assessment.
EDD is more than just a requirement to ensure compliance; it’s a vital part of protecting the integrity of the global financial system. Implementing EDD procedures that work is more than just an issue of compliance. It’s an investment in the safety and security the global financial system.