Trillions of dollars of laundered funds circulate the globe each year, and 90% of that illicit money remains undetected. Financial institutions have to use increased due diligence for and reduce the risk of shady activities that may lead to reputational and financial damage and ensure AML compliance.
Improved due diligence (EDD) involves an even more thorough analysis of individuals and companies that present raised risks for AML/CFT. It is an expansion of the customer due diligence method, and is triggered if your financial institution detects a high-risk element in that process. EDD may involve a greater dive into the customer’s background and transaction patterns, and it is especially important for these considered to be critical exposed folks (PEPs).
Numerous financial institutions have been struck with significant fines with respect to failing effectively follow client due diligence standards. A robust EDD strategy empowers FIs to deal with principle moments of data room provider comparison enhanced risk buyers and transactions effectively when mitigating the opportunity of large fiscal losses, legal penalties and negative press attention.
Typically, EDD is initiated when the initial CDD recognizes a higher level of risk based on country of residence, industry sector, deal patterns or perhaps associations with high-risk jurisdictions or persons. During the EDD process, the FI definitely will collect more comprehensive information concerning the customer to get a better understanding of their business activities, corporate framework, beneficial control and options for funds.
The EDD method also includes regular screenings of a customer against see lists, sanctions and VERVE lists to make certain they are not on any lists that might trigger extra protocols. This is an essential element of effective and continuous monitoring, and the best EDD alternative will include a strong internal and external risk test engine that could scan multiple databases.
