Around $2 trillion of illicit cash flows annually through the financial system worldwide despite the efforts of regulators and financial institutions. To combat dirty warpseq.com money enhanced due diligence (EDD) is a method that requires an extensive Know Your Customer (KYC) which examines the customer’s history and 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, like sources of wealth and funds corporate appointments, connections with other individuals or companies. It typically involves more thorough background checks, such as media searches, to identify any publically available evidence or evidence of reputational proof of criminal conduct or misdeeds that could pose a threat to the bank’s operations.
Regulatory bodies set out guidelines for when EDD should be triggered. This is usually contingent on the type of customer or transaction and whether the person who is being questioned is a politically exposed individual (PEP). It is the decision of each FI whether they would like to add EDD to CDD.
The most important thing is to establish good policies that make it clear to staff what EDD requires, and what it doesn’t. This will help avoid high-risk situations that could result in hefty fines for fraud. It’s important to establish an identity verification procedure in place that allows you to detect red-flags such as hidden IP addresses, spoofing techniques, and fictitious identifies.