Due diligence is required when a client or business is at greater risk of money laundering, terrorist financing and other financial crimes. This is referred to as enhanced due diligence which goes beyond the standard KYC/AML checks and gathers information that is not part of the standard scope.

This includes identifying people and organizations behind customers, such as the ultimate beneficial ownership (UBO) to discover the true source for wealth, funds, and business activities. It also probes underlying relationships and examines unresolved transactions and actions that could reveal hidden risks.

It’s an essential element in the fight against the funding of terrorists and criminals. It’s crucial to remember that EDD is a tool which should be applied on a case-by-case basis. For instance, an account opening in the UK with a clean passport, a solid address history, and no CCJs might only require CDD. However, a different client could require EDD because of an abundance of cash deposits or more complex transactions.

The best way to evaluate the need for EDD is to develop an exhaustive risk assessment and screening framework. This should encompass internal controls as well as external factors such a negative media, political instability and sanctions, financing of terrorism as well as organized crime and fraud.

Ultimately, effective due diligence doesn’t just mean meeting regulatory requirements or protecting your brand reputation; it’s about having a significant impact in the fight against criminality in the world. You require an identity verification and EDD system that is swift reliable, accurate, and cost-effective to accomplish this.

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