Trillions of dollars of laundered cash circulate the world each year, and 90% of that dubious money remains undiscovered. Financial institutions have to use increased due diligence to name and mitigate the risk of shady activities that lead to reputational and financial destruction and ensure AML compliance.

Increased due diligence (EDD) involves a lot more thorough analysis of individuals and companies that present enhanced risks for AML/CFT. It is an off shoot of the client due diligence procedure, and is also triggered when a financial institution detects a high-risk element in that process. EDD may entail a more deeply dive into the customer’s background and transaction habits, and it is particularly important for individuals considered to be critical exposed persons (PEPs).

A number of financial institutions have been hit with huge fines for failing effectively follow consumer due diligence requirements. A robust EDD strategy enables FIs to handle lifted risk consumers and trades effectively even though mitigating the opportunity of large monetary losses, legal penalties and negative media attention.

Commonly, EDD integrating VDRs in your business for a competitive edge is initiated when the first CDD identifies a higher level of risk based upon country of residence, sector sector, purchase patterns or perhaps associations with high-risk jurisdictions or individuals. During the EDD process, the FI definitely will collect more comprehensive information on the customer to obtain a better understanding of their organization activities, corporate composition, beneficial possession and sources of funds.

The EDD process also includes frequent screenings of a customer against view lists, sanctions and PEP lists to make certain they are not on virtually any lists that could trigger more protocols. That is an essential element of effective and continuous monitoring, and a superb EDD choice will include a strong internal and external risk analysis engine which could scan multiple databases.