Enhanced due diligence reshaping the contours of due diligence with VDR innovations is a risk-based due diligence process that empowers businesses to effectively handle transactions and customers that are high-risk while remaining compliant with regulatory standards. When properly implemented enhanced due diligence can protect businesses against significant legal penalties and reputational damages while ensuring that their Anti-Money Laundering and Customer Due Diligence processes are effective at combating financial criminals.
EDDs are often required when a particular transaction or customer is deemed to be high risk due to complicated ownership structures or political exposure. They may also be required if a customer is in a field that is prone to financial crime or laundering. A significant change in the customer’s behavior, like an increase in volume of transactions or the introduction of new types of transactions might also require an EDD. Finally, any transaction that involves a particular country or region that is more susceptible to money-laundering and terrorism financing will require an EDD.
EDD focuses on identifying beneficial owners, revealing hidden dangers, like the true beneficiaries of a bank account or transaction. It also identifies suspicious and unusual patterns of transactions and confirms the information by independent interviews and checks, website visits and third-party confirmation. The risk assessment is carried out by a review of the local market’s reputation through media sources, and existing AML policy.
EDD is not just a regulatory requirement; it’s an essential element in protecting the integrity of the global financial system. Implementing efficient EDD procedures is not just about compliance; it’s an investment in the security and safety of the global financial system.