Increased Due Diligence to get Financial Institutions

Trillions of dollars of laundered funds circulate the world each year, and 90% of that dubious money limitations of top digital storage services remains hidden. Financial institutions ought to use increased due diligence to name and reduce the risk of shady activities that may lead to reputational and financial destruction and ensure AML compliance.

Enhanced due diligence (EDD) involves a much more thorough evaluation of individuals and companies that present improved risks for AML/CFT. It is an extension of the buyer due diligence process, which is triggered when a financial institution picks up a high-risk element in that process. EDD may entail a more dive in to the customer’s background transaction habits, and it is especially important for all those considered to be see exposed folks (PEPs).

Several financial institutions have been struck with significant fines for the purpose of failing effectively follow customer due diligence requirements. A robust EDD strategy allows FIs to handle heightened risk clients and transactions effectively even though mitigating the potential for large economic losses, legal penalties and negative advertising attention.

Commonly, EDD is initiated when the initial CDD recognizes a higher level of risk based upon country of residence, market sector, transaction patterns or perhaps associations with high-risk jurisdictions or individuals. During the EDD process, the FI can collect more comprehensive information about the customer to acquire a better knowledge of their business activities, corporate structure, beneficial control and options for funds.

The EDD process also includes regular screenings of the customer against observe lists, sanctions and PEP lists to ensure that they are not really on virtually any lists that will trigger further protocols. This is an essential component to effective and continuous monitoring, and a great EDD remedy will include a strong internal and external risk test engine that can scan multiple databases.