Enhanced due diligence (EDD) is a risk based due diligence method that allows businesses to handle high-risk transactions and customers while still complying with the laws. When properly implemented it protects businesses from severe reputational and legal penalties while ensuring that their Anti-Money Laundering (AML) and Customer Due Diligence (CDD) processes are efficient in combating financial criminality.
Most of the time, EDD is required when the transaction or customer is deemed high-risk due to complex ownership structures, political exposure or involvement in sectors that are prone to financial criminal activity. A significant change in customer’s behavior, for example, an increase in the volume of transactions or new kinds of transactions may also require an EDD. Additionally any transaction that involves a country or a region with a higher risk of money laundering or financing for terrorism is likely to require an EDD.
EDD is focused on the identification of beneficial owners and uncovering undiscovered risks, like the true beneficiaries in the transaction or account. It also identifies suspicious and unusual patterns of transactions and validates the information with independent interviews and checks, website visits and confirmation from a third party. The risk assessment is completed by a review of the local market reputation via media sources, as well as the current AML policy.
EDD is more than just a requirement for compliance it’s a vital element of protecting the integrity of the global finance system. Implementing EDD procedures that work is not just a matter for compliance. It’s safeguard your business’s critical assets with VDR encryption an investment into the safety and security of the global financial system.
