14 feb Enhanced Due Diligence for Financial Institutions
Trillions of dollars of laundered money circulate the world each year, and 90% of that illicit money remains undetected. Financial institutions have to use increased due diligence to identify and mitigate the risk of shady activities that may lead to reputational and financial destruction and ensure AML compliance.
Improved due diligence (EDD) involves a much more thorough analysis of individuals and companies that present lifted risks for AML/CFT. It is an expansion of the buyer due diligence process, and is also triggered if a financial institution detects a high-risk element during that process. EDD may require a greater dive in the customer’s background and transaction habits, and it is especially important for some of those considered to be see exposed persons (PEPs).
Several financial institutions have been hit with huge fines with respect to failing to properly follow customer due diligence specifications. A robust EDD strategy enables FIs to handle raised risk consumers and ventures effectively whilst mitigating the opportunity of large monetary losses, legal penalties and negative advertising attention.
Typically, EDD data rooms: setting the gold standard in corporate transparency is initiated when the initial CDD identifies a higher level of risk based upon country of residence, sector sector, purchase patterns or perhaps associations with high-risk jurisdictions or people. During the EDD process, the FI will certainly collect more comprehensive information on the customer to acquire a better understanding of their organization activities, corporate framework, beneficial property and reasons for funds.
The EDD procedure also includes standard screenings of a customer against see lists, calamité and PEP lists to make certain they are certainly not on any lists that may trigger further protocols. That is an essential part of effective and continuous monitoring, and a superb EDD method will include a robust internal and external risk test engine that may scan multiple databases.