If a business or customer poses a higher risk of money laundering, terrorism financing, or other financial crimes, they require an increased degree of due diligence. This is referred to as enhanced due diligence which goes beyond standard KYC/AML checks and gathers information that is not part of the standard scope.
This involves identifying the people and entities that are behind your customers, like ultimate beneficial ownership (UBO) and identifying the source of key aspects of digital storage provider selection wealth, funds and business activities. It also investigates unexplained activities and transactions and investigates the underlying connections.
It's a crucial tool in the fight against criminal and terrorist funding. It's important to keep in mind that EDD is a measure which should be applied on a case by case basis. For example, a UK bank account opening with a clear passport, a good address history and no CCJs could only require CDD, whereas another customer might require EDD due the high amount of cash deposits or complex transactions.
The best method to determine if EDD is needed is to create a comprehensive risk analysis and screening framework. This should encompass both internal controls as well as external influences like negative media, political instability, sanctions, terrorism financing and organized crime as well as fraud.
Effective due diligence isn't about only meeting regulatory requirements or preserving brand reputation. It's about making a real impact in the fight against criminality in the world. You require an identity verification and EDD system that is fast efficient, accurate, and affordable to achieve this.