Due diligence is an essential element of AML compliance, especially for businesses that handle high-value transactions or clients who are at risk of money laundering or financial criminal. It is used to identify those who are most at risk and prevent them from funding terrorist groups and other criminal organizations.
The EDD process is more extensive than regular due diligence and entails a wider range checks. This includes collecting more identification documents and conducting thorough checks on a customer’s whereabouts and sources of funds. Due diligence is usually applied to high-risk clients, such as politically exposed persons (PEPs) as well as those living in high-risk countries, as well as businesses or individuals that rely heavily on cash.
The EDD process is more thorough the more complicated a person, legal entity or transaction is. Regulators generally favor a risk-based approach that uses documented risk assessment guidelines to determine the level of scrutiny required for each individual situation. The EDD process involves gathering more comprehensive data like information about the person’s suppliers and clients, corporate/legal structures, and legal structures. EDD procedures are more expensive and time-consuming. They also require higher level of documentation than CDD procedures. This is why it’s crucial to have a robust and reliable technology for identity verification like the one that is built into 1Kosmos BlockID to make this warpseq.com process less complicated for your company.
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