The standard procedure of due diligence on customers might not be adequate for clients with high risk. This is why enhanced due diligence (EDD) is necessary and involves deeper investigations to look for data rooms: setting the gold standard in corporate transparency money laundering and terrorist financing threats. EDD research helps businesses comply with regulations and safeguard their reputation.
Imagine that someone downloads your banking application to create a new account. They’ve passed the identity verification tests, and your examination of their financial records hasn’t given any warning signs. It’s good to hear however, there could be bad news. This is because the new customer could be a part of a criminal group that’s trying money laundering from illicit activities such as the trafficking of drugs, terrorism or corruption. It’s essential banks perform due diligence based on risk for new and existing customers.
In many instances, EDD is required for businesses that operate in high-risk sectors, high-risk countries, or any other field that requires special scrutiny. EDD searches could include a search for sanctions lists and criminal watchlists in order to ensure that a company does not conduct business with individuals or companies that are that are banned by regulatory agencies.
Typically, an EDD investigation includes information such as a thorough background profile of the customer; the location and source of the funds; and also indicators of financial crime, such as adverse media or the presence of well-known PEPs or financial criminals. It can also include detailed details regarding a customer’s beneficial ownership structure, such as the identification of the individuals who are the owners or control the legal entity as well as the sources of wealth and the funds they have.