Enhanced due diligence is an essential component of AML compliance for companies that handle high-value transactions and/or customers that are prone to money laundering and other financial crimes. It is used to eliminate the most dangerous customers and prevent them from supporting terrorist groups and other criminal organizations.
The EDD procedure is more thorough than regular due diligence, and involves an array of checks. This includes gathering more identification documents, performing strict verification of these IDs, and conducting thorough tests to confirm the location of a client and source of funds, known business relationships and other such things. This kind of due understanding digital room fees diligence is typically utilized for high-risk clients like politically exposed people (PEPs), people who are located in high-risk areas, and individuals or businesses who are cash-intensive.
The EDD procedure should be more comprehensive the more complex a person, legal entity, or transaction is. Regulators typically prefer a risk-based approach, which employs documented risk assessment procedures to determine the amount of scrutiny required for each case. The EDD process requires gathering more robust data including information about the person’s suppliers and customers as well as corporate/legal structures and legal structures. EDD processes are often more time-consuming, expensive and require more documentation as compared to CDD procedures. It is important to have an identity verification system that’s efficient and effective such as 1Kosmos’ BlockID, to make the process easier for your business.