Around $2 trillion in illicit cash flows per year through the global financial system despite efforts from financial institutions and regulators. One way to tackle dirty money is with enhanced due diligence (EDD), a deep know your customer (KYC) process that examines transactions that have higher risk of fraud.
EDD is generally considered to be a higher level of screening than basic CDD and can involve more information requests, such as sources of wealth and funds corporate appointments, associations with other individuals or companies. It is also more likely to require extensive background checks, like media searches, to https://warpseq.com/board-software-pricing-breakdown-detailed-review-of-the-cost/ identify any public or reputational evidence of criminal activity that could pose a risk to the bank’s business.
The regulatory bodies have rules on when EDD should be triggered. This is usually dependent upon the kind of transaction or customer, as well as if the person involved is politically exposed (PEP). It is up to each FI whether they want to add EDD to CDD.
The most important thing is to develop guidelines that make it clear to staff what EDD needs and what it does not. This can help to avoid situations that are high-risk and can lead to substantial fraud fines. It is essential to have a verification process for your identity in place that allows you to identify red flags like hidden IP addresses, spoofing techniques and fictitious identities.