Due diligence is required when a client or a business has a greater risk of money laundering, terrorist financing and other financial crimes. This is known as enhanced due diligence which goes beyond standard KYC/AML checks to collect information that isn’t part of the basic scope.

This includes identifying the people and entities behind customers, including the ultimate beneficial ownership (UBO), uncovering the true source for wealth as well as funds and business activities. It also investigates mysterious transactions and activities and examines the relationship behind them.

It’s a crucial tool in the fight against the financing of criminals and terrorists. It’s important to keep in mind that EDD is a security measure that should be used on a case-by-case basis. For example, an account opening in the UK with an unclean passport, a solid address history and no CCJs could only require CDD. But, another customer may require EDD due to the high volume of cash deposit or more complicated transactions.

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

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

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