If a business or customer has a higher chance of being a victim of money laundering, terrorist financing and other financial crimes, they need an additional level of due diligence. This is known as enhanced due diligence, that goes beyond the normal KYC/AML checks in order to gather information outside the basic scope.
This includes identifying the people and entities behind customers, such as the ultimate beneficial ownership (UBO) and identifying the real source of wealth or funds, as well as business activities. It also examines the relationships behind them and examines unresolved transactions and activities that may signal hidden risks.
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It’s an important tool in the fight against criminal and terrorist financing. However, it’s important to note that EDD should be applied on a case-by-case basis. For example, an account opening in the UK with a clean passport, a solid address history and no CCJs could only require CDD. However, a different customer may require EDD due to an abundance of cash deposit or more complicated transactions.
The best way to determine whether EDD is needed is to develop a comprehensive risk analysis and screening framework. This should include both your internal controls and external factors like negative media as well as sanctions, political instability terrorist finance and organized crime, as well as money laundering and fraud.
Ultimately, effective due diligence isn’t just about satisfying regulatory requirements or protecting your brand’s reputation. It’s about having a positive impact Board Software Pricing on the fight against criminality in the world. To do that, you need a fast, accurate and cost-effective identity verification and EDD solution.
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