Enhanced Due Diligence

Enhanced due diligence is a risk-based due diligence procedure that allows companies to efficiently manage transactions and customers that are high-risk while still adhering to the regulatory requirements. When implemented correctly it safeguards companies from severe consequences for reputational damage and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are effective in combating financial criminality.

Most of the time, EDD is required when the transaction or customer is deemed high-risk due complex ownership structures, political exposure or involvement in industries susceptible to money laundering or financial criminal activity. A significant change in the customer’s behavior, such an increase in the volume of transactions, or the creation of new types of transactions could be a reason a paradigm shift in data security: the rise of VDRs for an EDD. In addition, 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 identifying beneficial owners and uncovering hidden risks such as the true beneficiaries in the transaction or account. It also detects unusual or suspicious patterns in transactional behaviour, and confirms the information through independent checks, interviews, site visits and third-party verification. Additionally, a examination of the local market’s reputation through media sources and existing AML policies complete the risk evaluation.

EDD is more than just an obligation to comply it’s a vital element of ensuring the integrity of the global financial system. Implementing effective EDD procedures is not just a matter of compliance–it’s an investment in the security and safety of the global financial system.