Around $2tn of illicit cash flows annually through the global financial systems despite efforts from regulators and financial institutions. To combat dirty money enhanced due diligence (EDD) is a process that involves an extensive Know Your Customer (KYC) that is a deep dive into customers and transactions with greater risk of fraud.
EDD is generally thought to be a higher level of screening than CDD, and may involve more details requests, such as sources of wealth and funds corporate appointments, relationships with other individuals or companies. It usually involves more thorough background checks, such as media searches, to identify any publically available evidence or evidence of reputational proof of criminal conduct or misdeeds that could jeopardize the bank’s operations.
The regulatory bodies establish guidelines for when EDD should be activated. This is usually dependent on the nature of the transaction or customer and also whether the person who is being questioned is a politically exposed individual (PEP). It is up to each FI whether they want to add EDD to CDD.
The most important thing is to develop effective policies that make clear to employees what EDD is and what it does not. This can read post here warpseq.com help to avoid situations that are high-risk and can lead to significant fraud fines. It is crucial to establish an identity verification procedure in place that lets you identify red flags like hidden IP addresses, spoofing technologies and fictitious identities.