Enhanced due diligence is a due diligence based on risk process that allows companies to efficiently manage transactions and customers that are high-risk while enhanced due diligence remaining compliant with regulatory standards. If properly implemented, enhanced due diligence shields businesses from serious reputational and legal damages while ensuring their Anti-Money Laundering and Customer Due Diligence procedures are effective in combating financial criminals.

EDDs are generally required when a customer or transaction is deemed to be high risk due to the complexity of ownership structures or political exposure. They could also be required if the customer is involved in an industry that is prone to financial crime or money laundering. Additionally, a significant shift in the behavior of a customer, such as an increase in volume of transactions or transactions that aren’t well-known, may require an EDD. In addition any transaction that involves a country or a region with higher risks of money laundering or financing for terrorism is likely to require an EDD.

EDD focuses on identifying beneficial owners and uncovering hidden risks like the true beneficiaries in transactions or accounts. It also identifies suspicious or unusual patterns in transactions, and confirms the information through independent checks and interviews, website visits, and third-party verification. Additionally, a review of local market reputation through media sources and existing AML policies complete the risk assessment.

EDD isn’t only a regulation requirement; it’s an essential element in protecting the integrity of our global financial system. Implementing EDD procedures that work is more than a matter for compliance. It’s an investment in the security and safety of the global financial system.