Enhanced due diligence is a due diligence based on risk procedure that allows companies to efficiently manage transactions and customers at risk while remaining in compliance with the requirements of regulatory authorities. If properly implemented, it protects businesses from significant reputational and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) procedures are effective in combating financial crime.

Most of the time, EDD is required when a customer or transaction is deemed to be high-risk due to complex ownership structures, political exposure or involvement in industries that are susceptible to financial criminality. In addition any significant change in customer behavior for example, an increase in transaction volume or a change in the type of transactions might require an EDD. In addition, any transaction that involves a particular country or region with higher risks of money-laundering or terrorism financing will require an EDD.

EDD concentrates on finding beneficial owners and identifying hidden risks such as the real beneficiaries of transactions or accounts. It also detects suspicious understanding digital room fees or unusual patterns in transactional behavior, and confirms the information through independent checks or interviews, visits to sites, and third-party verification. The risk assessment is carried out by a thorough review of the local market’s reputation, based on media sources, as well as the current AML policy.

EDD is not just a regulatory requirement; it’s an essential element in safeguarding the integrity of the global financial system. Implementing EDD procedures that work is more than just a matter for compliance. It’s an investment in the safety and security of the global financial system.