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What Is Enhanced Due Diligence?

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When a customer or business is at a greater risk of money laundering, terrorism financing, and other financial crimes, they must be subject to an increased degree of due diligence. Also known as enhanced due diligence (EDD) This extends beyond the basic KYC and AML checks by collecting information outside of the normal scope.

This involves identifying the people and entities behind customers, like the ultimate beneficial ownership (UBO) in revealing the source of wealth as well as funds and business activities. It also examines the relationships behind them as well as investigates unproven transactions and actions that could indicate hidden risks.

It’s a crucial tool in the fight against the financing of criminals and terrorists. It’s important to remember that EDD is a measure which should be applied on a case by case basis. For instance an UK bank account opening with a clean passport, solid address history and no CCJs might only require CDD. However, another customer may require EDD because of the high quantity of cash deposits, or complex transactions.

The best way to assess the need for EDD is to develop an extensive risk assessment and screening framework. This should include both internal controls as well as external factors like negative media, political instability and sanctions, terrorism financing and organized crime, as well as fraud.

In the end, effective due diligence doesn’t just mean satisfying regulatory requirements or protecting your brand reputation; it’s about having a positive impact in the fight against criminality in the world. To do that you require a speedy reliable, accurate and cost-effective identity verification and EDD solution.