When a customer or business has a higher chance of being a victim of money laundering, terrorist financing trends of virtual data room solutions and other financial crimes, they should be given an elevated level of due diligence. This is referred to as enhanced due diligence that goes beyond the normal KYC/AML checks and gathers information that is not part of the standard scope.

This involves identifying the people and organizations behind customers, such as the ultimate beneficial ownership (UBO) and identifying the real source of wealth, funds, and business activity. It also investigates unexplained transactions and actions, and probes underlying relationships.

It’s a crucial aspect in the fight against the financing of terrorists and criminals. It’s important to remember that EDD is a tool which should be applied on a case-by-case basis. For example, an account opening in the UK with an unclean passport, a solid address history, and no CCJs might only require CDD. However, another customer may require EDD due to a high volume of cash deposit or complex transactions.

The best way to determine whether EDD is required is to develop a comprehensive risk analysis and screening framework. This should include internal controls and external factors such a negative media, political instability and sanctions, financing of terrorism as well as organized crime and fraud.

Effective due diligence isn’t about just meeting regulatory requirements or safeguarding brand reputation. It’s about having an impact in the fight against criminality in the world. To do that you require a quick, accurate and cost-effective identity verification and EDD solution.