Fighting Dirty Money With Enhanced Due Diligence

Each year, about $2tn in illicit cash flows through the global financial system despite the efforts of financial institutions and regulators to stop money laundering and terrorist financing. To combat dirty money, enhanced due diligence (EDD) is a method that requires a thorough Know Your Client (KYC) that digs deep into customers and transactions that have higher risk of fraud.

EDD is considered a higher screening level than CDD and may include more information requests such as sources and corporate appointments, funds, and relationships with companies or individuals. It often involves more thorough background checks, including media searches, in order to find any publicly available evidence or reputational evidence of misconduct or criminal activity that could jeopardize the bank’s operations.

The regulatory bodies have guidelines for when EDD should trigger. It is typically based upon the nature of the transaction or the customer, as well whether the individual in question is politically exposed (PEP). It is up to each FI whether they want to include EDD to CDD.

It is essential to have policies that clearly state to employees what EDD expects and what it is not. This can help to avoid high-risk situations that could lead best data rooms online secure and reliable to huge fines for fraud. It is also essential to have a thorough identity verification procedure that allows you to spot suspicious IP addresses, spoofing technologies and fictitious identities.

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