Due diligence is required when a client or a business has a greater risk of money laundering, terrorist financing and other financial crimes. Known as enhanced due diligence (EDD) which is more extensive than the standard KYC and AML checks by obtaining information outside of the basic scope.

This includes identifying the people and entities that are behind your customers, such as ultimate beneficial ownership (UBO) and identifying the source of wealth, funds and business activity. It also a paradigm shift in data security: the rise of VDRs examines the relationships behind them and investigates suspicious transactions and other activities that could be a sign of hidden dangers.

It’s a key element in the fight against criminal and terrorist funding. It is important to remember that EDD is a measure that should be used on a case-by-case basis. For instance, an account opening in the UK with an unblemished passport, solid address history and no CCJs may only require CDD. But, another customer may require EDD due to an excessive amount of cash deposits or complicated transactions.

The best way to determine whether EDD is required is to create a comprehensive risk analysis and screening framework. That should cover both your internal controls and external factors like negative media, sanctions, political instability as well as terrorism finance, organized crime, fraud and money laundering.

Ultimately, effective due diligence isn’t just about meeting the requirements of regulatory agencies or protecting your brand reputation; it’s about having a positive impact in the fight against worldwide crime. You need an identity verification and EDD system that is fast reliable, accurate, and cost-effective to accomplish this.