Enhanced due diligence is a due diligence based on risk procedure that allows businesses to effectively manage transactions and customers at risk while still adhering to regulatory standards. When implemented correctly enhanced due diligence safeguards businesses against significant reputational and legal penalties while ensuring their Anti-Money Laundering and Customer Due Diligence procedures are effective in combating financial criminals.
EDDs are generally required when a transaction or customer is deemed to be high risk due to the complexity of ownership structures or political exposure. They may also be required if the customer is involved in a field that is prone to financial crime or money laundering. Additionally an important change in customer behavior, such as an increase in volume of transactions or a change in the type of transactions, may require an virtual data room pricing what you need to know EDD. Additionally, any transaction that involves a country or region that poses higher risks of money laundering and terrorism financing requires an EDD.
EDD concentrates on identifying beneficial owners and revealing hidden risks such as the real beneficiaries of an account or transaction. It also identifies unusual or suspicious patterns in transactional behavior, and validates information with independent checks, interviews, site visits and third-party verification. The risk assessment is completed through a review of local market’s reputation using media sources, as well as the current AML policy.
EDD is more than just a requirement to ensure compliance and is a crucial element of ensuring the integrity of the global finance system. Implementing effective EDD procedures isn’t just a matter to be complied with, it’s an investment in the security and safety of the global financial system.