Trillions of dollars of laundered funds circulate the globe each year, offerings in modern digital rooms and 90% of that illicit money remains undetected. Financial institutions need to use increased due diligence to recognize and reduce the risk of sketchy activities that may lead to reputational and financial damage and ensure AML compliance.
Increased due diligence (EDD) involves a lot more thorough evaluation of individuals and companies that present increased risks for AML/CFT. It is an extension of the customer due diligence method, and is triggered each time a financial institution detects a high-risk element during that process. EDD may entail a more dive in to the customer’s background transaction patterns, and it is especially important for these considered to be noteworthy exposed folks (PEPs).
A number of financial institutions have been strike with significant fines pertaining to failing to properly follow client due diligence specifications. A robust EDD strategy empowers FIs to handle heightened risk consumers and transactions effectively whilst mitigating the potential for large economic losses, legal penalties and negative media channels attention.
Commonly, EDD is started when the first CDD recognizes a higher level of risk based on country of residence, industry sector, deal patterns or associations with high-risk jurisdictions or individuals. During the EDD process, the FI is going to collect more comprehensive information on the customer to obtain a better knowledge of their organization activities, corporate structure, beneficial possession and sources of funds.
The EDD method also includes frequent screenings of your customer against watch lists, calamité and VERVE lists to make certain they are certainly not on any kind of lists that may trigger extra protocols. This is an essential element of effective and continuous monitoring, and a great EDD resolution will include a strong internal and external risk analysis engine that could scan multiple databases.
