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 reduce the risk of sketchy activities that lead to reputational and financial destruction and ensure AML compliance.
Increased due diligence (EDD) involves a more thorough evaluation of individuals and companies that present higher risks for AML/CFT. It is an expansion of the client due diligence method, and is triggered any time a financial institution picks up a high-risk element during that process. EDD may entail a much lower dive in the customer’s background transaction patterns, and it is specifically important for many considered to be noteworthy exposed individuals (PEPs).
Several financial institutions have been strike with huge fines for failing effectively follow consumer due diligence criteria. A robust EDD strategy enables FIs to handle raised risk buyers and financial transactions effectively even though mitigating the potential for large financial losses, legal penalties and negative media attention.
Commonly, EDD is started when the primary CDD determines a higher level of risk based upon country of residence, industry sector, transaction patterns or associations with high-risk jurisdictions or individuals. During the EDD process, the FI might collect even more comprehensive information on the customer to get a better knowledge of their organization activities, corporate structure, beneficial title and sources of funds.
The EDD process also includes standard screenings of your customer against https://warpseq.com/what-is-enhanced-due-diligence-bsa/ look at lists, calamité and VERVE lists to ensure that they are not on any lists that might trigger extra protocols. This can be an essential component to effective and continuous monitoring, and a fantastic EDD treatment will include a robust internal and external risk evaluate engine which could scan multiple databases.