18 Abr Enhanced Due Diligence

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Due diligence is an essential component of AML compliance, particularly for companies that deal with high-value transactions or customers who are susceptible to money laundering and financial criminal. It helps identify the most risky clients and stop them from donating to terrorist groups as well as other criminal organizations.

While the standard customer due diligence is designed to confirm a customer’s identity but the EDD procedure is more thorough and requires more extensive checks. This involves obtaining more identification documents and performing thorough checks on a client’s location and source of funds. Due diligence is often applied to high-risk customers, for instance, politically-exposed individuals (PEPs) and those from high-risk nations, and businesses or individuals that rely heavily on cash.

The more complicated the person, legal entity or transaction, the more comprehensive the EDD procedure should be. Regulators typically prefer a risk-based approach that uses documented risk assessment procedures to determine the level of scrutiny that is required for each individual case. The EDD procedure also involves gathering more complete information, which includes information on the person’s clients, suppliers and corporate/legal structures. EDD processes are often more time-consuming, costly and require greater documentation than CDD procedures. That’s why it’s essential to have a robust and effective identity verification technology like the one integrated into 1Kosmos BlockID to make this process easier for your business.