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

This includes identifying the individuals and entities behind your customers, including ultimate beneficial ownership (UBO), and uncovering the real source of wealth, funds and business activities. It also investigates the underlying relationships and investigates unexplained transactions and activities that could be a sign of hidden dangers.

It’s an important element in the fight against criminal and terrorist funding. However, it’s important to note that EDD should be analyzed on a case-by-case basis. For instance, a bank account opening in the UK with clear passport, a solid address history, and no CCJs might only require CDD. However, a different client could require EDD because of a high volume of cash deposit or complex transactions.

The best way to determine the necessity for EDD is to create an entire risk assessment and screening framework. This should encompass internal controls as well as external factors like negative media, political instability, sanctions, terrorism financing and organized crime as well as fraud.

Effective due diligence doesn’t mean simply meeting regulatory requirements, or protecting brand reputation. It’s about having an impact on the fight against criminality in the world. You require an identity verification and EDD system that is fast reliable, accurate, and cost-effective to accomplish this.

VDRs: the touchstone of excellence in business data management