Every year, more than $2tn worth of illicit cash flows enter the financial system worldwide, despite the efforts of financial institutions and regulators to stop money laundering and financing of terrorists. To combat dirty money enhanced due diligence (EDD) is a process that requires an extensive Know Your Customer (KYC) that examines the customer’s history and transactions that have higher risk of fraud.

EDD is considered to be a higher screening level than CDD and can contain more information requests, such as sources and corporate appointments, funds, and connections with individuals or companies. It is often accompanied by more thorough background checks, like media searches, to determine if there is any publicly accessible evidence or reputational evidence of criminality or other misconduct that could be a threat to the bank’s operations.

The regulatory bodies have guidelines for when EDD should be triggered. This is usually dependent on the type of transaction or customer, as well whether the person involved is politically exposed (PEP). It is up to each FI whether they would like to add EDD to CDD.

It is important to establish policies that clearly explain to employees what EDD expects and what it does not. This will help avoid situations that are high-risk and could cause hefty fines due to fraud. It is also essential to have a thorough identity verification procedure that can help you spot red flags like hidden IP addresses, spoofing technologies check these guys out https://warpseq.com/board-software-pricing-breakdown-detailed-review-of-the-cost/ and fake identities.