Due diligence is required when a consumer or business is at greater risk of money laundering, terrorist financing, and other financial crimes. This is referred to as enhanced due diligence which goes above and beyond the standard KYC/AML checks in order to gather information that is not part of the standard scope.
This includes identifying the individuals and entities behind your customers, like ultimate beneficial ownership (UBO) and identifying the true source of wealth, money and business activity. It also investigates unexplained transactions and actions and probes the root of the relationships.
It’s an important tool in the fight against criminal and terrorist funding. It’s crucial to remember that EDD is a measure that should be utilized on a case by case basis. For example, a UK bank account opening with a clean passport, solid address history and no CCJs might only require CDD, while a different customer might require EDD due the high number of cash deposits or the complexity of transactions.
The best way to determine if EDD is needed is to design a thorough risk analysis and screening framework. This should include both your internal controls as well as external factors such as adverse media and political instability, sanctions as well as terrorism finance and organized crime, as well as money laundering and fraud.
Ultimately, effective due diligence isn’t just about meeting the requirements of regulatory agencies or protecting your brand’s reputation. It’s about having a enhanced due diligence in banking sector analysis significant impact in the fight against the global threat of crime. To accomplish that you require a speedy efficient, accurate and affordable identity verification and EDD solution.
