Trillions of dollars of laundered cash circulate the globe each year, and 90% of that illicit money remains hidden. Financial institutions have to use increased due diligence to name and mitigate the risk of questionable activities that may lead to reputational and financial harm and ensure AML compliance.
Increased due diligence (EDD) involves an even more thorough evaluation of individuals and companies that present increased risks for AML/CFT. It is an extendable of the customer due diligence process, and it is triggered every time a financial institution picks up a high-risk element in that process. EDD may entail a much deeper dive in the customer’s background and transaction habits, and it is specifically important for individuals considered to be see exposed individuals (PEPs).
Numerous financial institutions enhanced due diligence have been hit with huge fines for the purpose of failing to properly follow client due diligence benchmarks. A robust EDD strategy enables FIs to manage lifted risk consumers and trades effectively while mitigating the potential for large monetary losses, legal penalties and negative media channels attention.
Typically, EDD is initiated when the primary CDD determines a higher level of risk depending on country of residence, sector sector, purchase patterns or perhaps associations with high-risk jurisdictions or persons. During the EDD process, the FI is going to collect even more comprehensive information on the customer to have a better comprehension of their business activities, corporate framework, beneficial ownership and sources of funds.
The EDD process also includes standard screenings of the customer against enjoy lists, sanctions and VERVE lists to make sure that they are certainly not on virtually any lists that may trigger extra protocols. This is certainly an essential element of effective and continuous monitoring, and a very good EDD formula will include a strong internal and external risk assessment engine that could scan multiple databases.
