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Enhanced due diligence is a crucial component of AML compliance for businesses that handle high-value transactions or customers who are susceptible to money laundering and other financial crimes. It’s used to weed out those who are most at risk and deter them from funding terrorist groups and other criminal organizations.
While the normal customer due diligence is designed to confirm a customer’s identity however, the EDD procedure is more thorough and requires more trends of virtual data room solutions extensive checks. This includes gathering more identification documents, performing stringent verification of those IDs, and conducting thorough checks to verify a client’s location or source of funds established business relationships and the like. This kind of due diligence is generally employed for high-risk customers like politically exposed people (PEPs) and those who reside in countries with high risk and businesses or individuals who are cash-intensive.
The more complex a person, legal entity or transaction, the more thorough the EDD procedure should be. Regulators generally prefer a risk-based method that uses documented risk assessment policies to determine the level of scrutiny required for each case. The EDD procedure also requires more comprehensive information, including information about the person’s customers, suppliers and corporate/legal structures. EDD processes are often more costly, time-consuming and require more documentation compared to CDD procedures. That’s why it’s critical to use a reliable and efficient identity verification system such as the one built into 1Kosmos BlockID to make this process more efficient for your company.
