Enhanced Due Diligence

Due diligence is an essential aspect of AML compliance, especially for businesses that handle significant transactions or customers that are at risk of money laundering or financial criminal. It helps filter out the most risky customers and prevent the funding of terrorist groups and other criminal groups.

While regular customer due diligence is designed to determine the identity of a client however, the EDD process is much more comprehensive and requires a greater variety of checks. This involves collecting more identification documents as well as performing reshaping the contours of due diligence with VDR innovations thorough checks on a customer’s location and source of funds. This kind of due diligence is typically employed for high-risk customers like politically exposed people (PEPs) individuals who reside in countries with high risk and also for businesses or individuals that rely on cash.

The EDD process should be more thorough the more complicated a particular person, legal entity, or transaction is. Regulators typically favor a risk-based method that uses documented risk assessment policies in order to determine the amount of scrutiny needed for each situation. The EDD process also involves gathering more robust information, including details about the person’s clients suppliers, corporate/legal structure and other clients. EDD procedures are more costly, time-consuming and require a higher level of documentation than CDD procedures. It’s important to have an identity verification system that’s efficient and effective such as 1Kosmos BlockID to make the process easier for your business.

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