Around $2tn of illicit cash flows annually through the global financial system, despite efforts by regulators and financial institutions. One way to stop dirty money is with enhanced due diligence (EDD) that is a comprehensive know your customer (KYC) process that examines transactions that have higher fraud risks.
EDD is considered a higher screening level than CDD and can also include more information requests like sources and corporate appointments, funds, and connections with companies or individuals. It also often involves more in-depth background checks, including media searches, to identify any reputational or publically available evidence of misconduct or criminal activity that could pose an enigma to the bank’s business.
The regulatory bodies provide guidelines for when EDD should Board Software be triggered, and this is usually dependent on the kind of transaction or customer and whether the person concerned is a politically exposed person (PEP). It is up to each FI whether they want to include EDD to CDD.
The most important thing is to develop guidelines that make it easy for staff to understand what EDD needs and what it doesn’t. This will help avoid high-risk scenarios that can result in substantial fines for fraud. It’s also vital to have a thorough identity verification procedure that allows you to spot warning signs such as hidden IP addresses, spoofing technologies, and fictitious identities.