When a company or client has a higher chance of being a victim of money laundering, terrorism financing, or other financial crimes, they need an additional level of due diligence. Also known as enhanced due diligence (EDD) This extends beyond the basic KYC and AML checks by obtaining information outside the scope of normal KYC and AML.

This includes identifying people and entities that have a connection to customers, such as the ultimate beneficial ownership (UBO) in revealing the source of wealth and funds as well as business activities. It also investigates mysterious transactions and activities and probes the root of the relationships.

It’s an important tool in the fight against criminal and terrorist financing. However, it’s important to note that EDD must be considered on a case-by-case basis. For instance, an account opening in the UK with an unclean passport, a solid address history, and no CCJs might only require CDD. However, another customer may require EDD due to the high volume of cash deposit or complex transactions.

The best way to determine if EDD is needed is to develop a comprehensive risk analysis and screening framework. This should encompass internal controls as well as external influences like negative media, political instability, sanctions, terrorism financing as well as organized crime and fraud.

Ultimately, effective due diligence isn’t just about satisfying regulatory requirements or protecting enhanced due diligence your brand reputation; it’s about having a significant impact in the fight against global crime. You require an identity verification and EDD system that is swift reliable, accurate, and cost-effective to accomplish this.