For customers with high risk for high-risk customers, the standard customer due diligence (CDD) process might not be enough. This is why best data rooms online secure and reliable enhanced due diligence is needed that involves more thorough investigations to check potential threats to terror financing and money laundering risks. EDD research helps businesses to adhere to regulations and protect their reputation.
Imagine a user downloads your banking app to open a new account. They’ve cleared the identity verification checks and your review of their financial history does not raise warnings. This is a good thing, but it could be a negative for your business. That’s because the new customer could be part of a criminal enterprise that’s trying to smuggle funds from illegal activities like corruption, drug trafficking, or terrorism. This is the reason it’s important for banks to perform additional due diligence based on risk on customers who are new or existing.
In most cases, EDD is required for businesses that operate in high-risk sectors or countries with high risk, or any other industry that requires special attention. EDD searches could include searches of criminal watchlists and sanctions lists to ensure that the company is not conducting business with any businesses or individuals who are banned by regulatory bodies.
A typical EDD investigation could include information including a full background profile of the person being investigated, the source and destination of the money as well as other indicators of financial crimes like the presence of PEPs, financial criminals or negative media. It can also include detailed details regarding a customer’s beneficial ownership structure, such as the identification of those who control or own the legal entity, as well as their sources of wealth and money.