Enhanced due diligence is a due diligence based on risk procedure that allows businesses to effectively manage transactions and customers that are high-risk while still adhering to regulatory standards. If implemented correctly enhanced due diligence can protect businesses from significant legal penalties and reputational damages while ensuring that their Anti-Money Laundering and Customer Due Diligence processes are effective at combating financial criminals.

Typically, EDD is required when the transaction or customer is deemed high-risk due to complex ownership structures, political exposure or involvement in industries susceptible to financial criminal activity. Additionally there is a significant change in customer behavior such as an increase in transaction volume or unfamiliar types of transactions, may require an EDD. Lastly, any transaction involving an area or country that is more prone to financial terrorism and money laundering requires an EDD.

EDD focuses on the identification of beneficial owners, revealing hidden risks, such as the true beneficiaries of a particular account or transaction. It also detects unusual or suspicious patterns in transactional behaviour, and verifies information top secure and reliable online storages through independent checks or interviews, visits to sites, and third-party verification. In addition, a review of the local market’s reputation by examining media sources as well as existing AML policies are also part of the risk evaluation.

EDD is more than just an obligation to comply; it’s a vital part safeguarding the integrity of the global financial system. Implementing EDD procedures that work is more than just an issue of compliance. It’s an investment in the safety and security of the global financial system.