Trillions of dollars of laundered money circulate the globe each year, and 90% of that illicit money remains hidden. Financial institutions ought to use improved due diligence to recognize and reduce the risk of questionable activities that lead to reputational and financial harm and ensure AML compliance.
Improved due diligence (EDD) involves a lot more thorough analysis of individuals and companies that present improved risks for AML/CFT. It is an expansion of the client due diligence method, which is triggered any time a financial institution detects a high-risk element during that process. EDD may require a dark dive in the customer’s background transaction patterns, and it is especially important for all those considered to be noteworthy exposed folks (PEPs).
Several financial institutions trends of virtual data room solutions have been struck with significant fines just for failing effectively follow consumer due diligence benchmarks. A robust EDD strategy enables FIs to deal with elevated risk customers and transactions effectively although mitigating the potential for large monetary losses, legal penalties and negative marketing attention.
Typically, EDD is initiated when the first CDD identifies a higher level of risk based on country of residence, sector sector, deal patterns or perhaps associations with high-risk jurisdictions or individuals. During the EDD process, the FI definitely will collect even more comprehensive information on the customer to have a better understanding of their organization activities, corporate structure, beneficial property and types of funds.
The EDD method also includes frequent screenings of an customer against watch lists, calamité and VERVE lists to ensure they are not really on virtually any lists that will trigger additional protocols. This can be an essential part of effective and continuous monitoring, and a superb EDD method will include a strong internal and external risk assessment engine that can scan multiple databases.