Every year around $2tn in illicit cash flows through the financial system worldwide, despite the efforts of regulators and financial institutions to stop the laundering of money and financing terrorists. One way to stop dirty money is through enhanced due diligence (EDD) that is a comprehensive know your customer (KYC) process that digs into transactions and customers that pose greater risk of fraud.

EDD is regarded as a more thorough screening level than CDD and can also include more information requests like sources and funds, corporate appointments and connections with individuals or companies. It also often involves more extensive background checks, which may include media searches, which are used to determine any publically available or reputational evidence of misconduct or criminal activity that could pose risks to the bank’s business.

Regulatory bodies have guidelines on when EDD should trigger. This is usually dependent on the kind of transaction or customer, as well whether the person involved is politically exposed (PEP). However, it is up to each FI to take a subjective judgment call about what triggers EDD in addition to CDD.

The key is to create solid policies that make it clear to staff what EDD requires and what it doesn’t. This will help to avoid high-risk scenarios that could result in hefty fines for fraud. It’s also important to have a thorough process for identity verification which allows you to identify check these guys out https://warpseq.com/board-software-pricing-breakdown-detailed-review-of-the-cost/ warning signs such as hidden IP addresses, spoofing technology and fictitious identities.