Nov 11, 2024
Enhanced due diligence (EDD) is a type of risk based due diligence system that enables companies to manage high-risk transaction and customers while remaining in compliance with the regulations. When properly implemented, enhanced due diligence shields businesses from serious reputational and legal penalties while ensuring that their Anti-Money Laundering and Customer Due Diligence procedures are effective in combating financial criminals.
EDDs are generally required in cases where a transaction or a customer is classified as high-risk due to the complexity of ownership structures or political exposure. They may also be required when the customer is in an industry that is susceptible to financial crime or money laundering. A significant change in customer’s behavior, such an increase in the volume of transactions or new types of transactions may also require an EDD. Additionally, any transaction that involves a country or region which is at risk of money laundering and terrorism financing requires an EDD.
EDD is focused on identifying beneficial owners and revealing hidden risks like the real beneficiaries of an account or transaction. It also identifies suspicious or unusual patterns in transactional behaviour, and confirms the information through independent checks, interviews, site visits, and third-party verification. The risk assessment is carried out by a review of the local market reputation via media sources and the existing AML policy.
EDD isn’t only a regulation requirement; it’s a crucial element of safeguarding the integrity of global principle moments of data room provider comparison financial system. Implementing efficient EDD procedures isn’t just about compliance; it’s an investment in the safety and security of the global financial system.