Fighting ***** Money With Enhanced Due Diligence

Around $2 trillion of illicit cash flows per year through the global financial systems despite efforts from regulators and financial what is enhanced due diligence bsa institutions. To stop ***** money, enhanced due diligence (EDD) is a method that requires a thorough Know Your Customer (KYC) that investigates customers in depth and transactions with greater risk of fraud.

EDD is regarded as a more thorough screening level than CDD and can contain more information requests, including sources and corporate appointments, funds and relationships with individuals or companies. It usually involves more thorough background checks, like media searches, in order to identify any publically available evidence or reputational evidence of criminal activity or misconduct that could be a threat to the bank’s operations.

The regulatory bodies have guidelines for when EDD should be activated, and this is usually dependent on the nature of the customer or transaction and also whether the person concerned is a politically exposed individual (PEP). However, it is ultimately up to each FI to take a subjective judgement on what triggers EDD in addition to CDD.

It is essential to have policies that clearly communicate to employees what EDD expects and what it does not. This can help to avoid high-risk situations that could lead to hefty fraud fines. It’s also crucial to have a thorough identity verification procedure that enables you to detect warning signs such as hidden IP addresses, spoofing technology, and fictitious identities.