Trillions of dollars of laundered money circulate the globe each year, and 90% of that illicit money remains undiscovered. Financial institutions have to use enhanced due diligence to name and reduce the risk of shady activities that may lead to reputational and financial harm and ensure AML compliance.

Improved due diligence (EDD) involves a much more thorough analysis of individuals and companies that present increased risks what is enhanced due diligence bsa for AML/CFT. It is an expansion of the consumer due diligence procedure, which is triggered every time a financial institution picks up a high-risk element in that process. EDD may involve a more deeply dive in to the customer’s background and transaction habits, and it is especially important for some of those considered to be politically exposed folks (PEPs).

Numerous financial institutions have been hit with significant fines with respect to failing to properly follow customer due diligence criteria. A robust EDD strategy empowers FIs to handle enhanced risk customers and deals effectively whilst mitigating the opportunity of large economic losses, legal penalties and negative videos attention.

Typically, EDD is started when the preliminary CDD recognizes a higher level of risk based upon country of residence, market sector, transaction patterns or perhaps associations with high-risk jurisdictions or persons. During the EDD process, the FI definitely will collect more comprehensive information on the customer to obtain a better comprehension of their organization activities, corporate structure, beneficial ownership and reasons for funds.

The EDD process also includes regular screenings of your customer against see lists, sanctions and PEP lists to make sure that they are not on any lists which would trigger additional protocols. This really is an essential component to effective and continuous monitoring, and a great EDD choice will include a robust internal and external risk diagnosis engine that can scan multiple databases.