Every year around $2tn in illicit cash flows enter the global financial system despite the efforts of financial institutions and regulators to prevent money laundering and financing of terrorists. To combat dirty money, enhanced due diligence (EDD) is a process that involves a thorough https://warpseq.com/board-software-pricing-breakdown-detailed-review-of-the-cost/ Know Your Customer (KYC) which is a deep dive into customers and transactions with higher fraud risks.

EDD is considered to be a higher screening level than CDD and can also include more information requests such as sources and corporate appointments, funds, and affiliations with individuals or companies. It typically involves more thorough background checks, like media searches, to determine if there is any publicly accessible evidence or evidence of reputational proof of criminal activity or misconduct that could jeopardize the bank’s operations.

The regulatory bodies have guidelines for when EDD should be activated, and this is usually dependent on the type of customer or transaction and also whether the individual in question is a politically exposed person (PEP). It is up to each FI whether they would like to include EDD to CDD.

It is important to have policies that clearly explain to employees what EDD expects and what it is not. This will allow you to avoid situations that are high-risk and could result in substantial fines for fraud. It’s important to establish an identity verification procedure in place that will allow you to identify red flags, such as hidden IP addresses, spoofing technologies and fictitious identifiers.