Trillions of dollars of laundered money circulate the globe each year, optimizing deal timelines with real-time VDR collaborations and 90% of that illicit money remains hidden. Financial institutions need to use increased due diligence to recognize and reduce the risk of shady activities t reputational and financial damage and ensure AML compliance.

Enhanced due diligence (EDD) involves a much more thorough evaluation of individuals and companies that present heightened risks for AML/CFT. It is an extension of the buyer due diligence process, and is triggered every time a financial institution picks up a high-risk element in that process. EDD may require a much deeper dive in the customer’s background transaction habits, and it is particularly important for individuals considered to be noteworthy exposed people (PEPs).

Many financial institutions have been struck with large fines with regards to failing effectively follow consumer due diligence benchmarks. A robust EDD strategy empowers FIs to manage improved risk clients and transactions effectively whilst mitigating the opportunity of large financial losses, legal penalties and negative advertising attention.

Commonly, EDD is started when the initial CDD recognizes a higher level of risk based on country of residence, sector sector, deal patterns or perhaps associations with high-risk jurisdictions or people. During the EDD process, the FI will collect even more comprehensive information on the customer to get a better knowledge of their organization activities, corporate composition, beneficial ownership and options for funds.

The EDD procedure also includes regular screenings of an customer against check out lists, sanctions and PEP lists to ensure they are not on any lists that may trigger extra protocols. This can be an essential a part of effective and continuous monitoring, and a very good EDD solution will include a robust internal and external risk assessment engine that can scan multiple databases.