Trillions of dollars of laundered funds circulate the world each year, https://warpseq.com/virtual-data-room-pricing-what-you-need-to-know/ and 90% of that illicit money remains undiscovered. Financial institutions need to use increased due diligence to distinguish and reduce the risk of questionable activities t reputational and financial harm and ensure AML compliance.
Increased due diligence (EDD) involves an even more thorough analysis of individuals and companies that present improved risks for AML/CFT. It is an off shoot of the consumer due diligence process, which is triggered if a financial institution picks up a high-risk element in that process. EDD may involve a much lower dive in the customer’s background transaction habits, and it is specifically important for the ones considered to be noteworthy exposed people (PEPs).
Many financial institutions have been hit with significant fines intended for failing to properly follow client due diligence specifications. A robust EDD strategy allows FIs to take care of enhanced risk clients and deals effectively although mitigating the opportunity of large economic losses, legal penalties and negative press attention.
Typically, EDD is started when the primary CDD pinpoints a higher level of risk based on country of residence, industry sector, deal patterns or perhaps associations with high-risk jurisdictions or people. During the EDD process, the FI will collect more comprehensive information on the customer to acquire a better understanding of their organization activities, corporate framework, beneficial control and causes of funds.
The EDD procedure also includes standard screenings of any customer against check out lists, calamité and VERVE lists to make certain they are not on virtually any lists that could trigger more protocols. This is certainly an essential component to effective and continuous monitoring, and a fantastic EDD alternative will include a strong internal and external risk test engine that may scan multiple databases.