Due diligence is required when a client or a business has a greater risk of money laundering, terrorist financing, and other financial crimes. This is known as enhanced due diligence, which goes beyond standard KYC/AML checks in order to gather details that are not in the normal scope.

This includes identifying the people and entities that have a connection to customers, like the ultimate beneficial ownership (UBO) in revealing the real source of wealth or funds, as well as business activity. It also examines the relationships behind them and investigates unexplained transactions and activities that may reveal hidden risks.

It’s an essential element in fighting 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 instance, an account opening in the UK with clear passport, a solid address history, and no CCJs might only require CDD. However, a different client might require EDD because of a high volume of cash deposits or complicated transactions.

The best way to determine whether EDD is required is to create a comprehensive risk analysis and screening framework. This should encompass internal controls and external factors such a negative media, political instability and sanctions, financing of terrorism and organized crime as well as fraud.

In the end, effective due diligence isn’t just about meeting regulatory requirements or protecting your brand’s reputation. It’s about having a significant impact in the fight against global crime. You need an identity verification and EDD system that’s fast efficient, accurate, and affordable to accomplish this.

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