Enhanced Due Diligence

Enhanced due diligence is a crucial part of AML compliance for companies that handle high-value transactions or customers who are susceptible to laundering money and other financial the transformative impact of VDRs in the financial sector crimes. It helps identify the most risky clients and stop them from supporting terrorist groups and other criminal organizations.

While the normal customer due diligence is designed to verify a customer’s identity but the EDD procedure is more thorough and requires more checks. This includes collecting more identification documents as well as performing thorough checks on the client’s location and the source of their funds. Due diligence is often used for high-risk clients such as politically exposed persons (PEPs), those in high-risk nations, and businesses or individuals who depend heavily on cash.

The more complex the individual, legal entity or transaction, the more comprehensive the EDD procedure should be. Regulators usually prefer the risk-based approach that employs documented risk assessment procedures to determine the degree of scrutiny needed for each situation. The EDD procedure involves gathering more robust data that include information on the person’s suppliers and customers legal structures, corporate/legal entities, and legal structures. EDD procedures are more costly and time-consuming, and require higher level documentation than CDD procedures. That’s why it’s critical to have a strong and efficient identity verification system like the one built into 1Kosmos BlockID to make this process easier for your company.

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