Every year, around $2tn of illicit cash flows are circulating through the global financial system, despite the efforts of regulators and financial institutions to prevent the laundering of money and financing terrorists. To combat dirty money enhanced due diligence (EDD) is a procedure that involves an extensive Know Your Customer (KYC) that is a deep dive into customers as well as transactions that carry higher fraud risks.
EDD is regarded as a more thorough screening level than CDD and can include more information requests, including sources and corporate appointments, funds, and affiliations with individuals or companies. It can also involve more extensive background checks, which may include media searches, which are used to determine any public or reputational evidence of criminal activity that could pose risks to simplify IPO document management with intuitive data rooms the bank’s business.
The regulatory bodies have guidelines for when EDD should be triggered. This is typically contingent upon the nature of the transaction or customer, and also whether the person in question is politically exposed (PEP). It is the decision of each FI to decide whether they wish to include EDD to CDD.
It is important to establish policies that clearly communicate to employees what EDD expects and what it does not. This will help to avoid high-risk scenarios that can result in substantial fines for fraud. It’s important to have a verification process for your identity in place that will allow you to identify red flags like hidden IP addresses, spoofing techniques and fictitious identifications.