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Enhanced Due Diligence

Enhanced due diligence is an essential component of AML compliance for companies that handle high-value transactions and/or customers that are susceptible to laundering money and other financial crimes. It’s used to eliminate the riskiest of clients and stop them from funding terrorist organizations and other criminal groups.

The EDD process is more thorough than regular due diligence, and involves more checks. This includes collecting more identification documents as well as performing thorough checks on a customer’s whereabouts and sources of funds. Due diligence is typically used on high-risk clients, for instance, politically-exposed individuals (PEPs), those in high-risk nations, and businesses or individuals who rely heavily on cash.

The EDD process should be more comprehensive the more complex a person legal entity or transaction is. Regulators typically prefer an approach based on risk that draws upon documented risk assessment procedures to determine the amount of scrutiny required for each case. The EDD process involves gathering more detailed information like information about the person’s suppliers and clients, corporate/legal structures, and legal structures. EDD procedures are typically more time-consuming, costly and require greater documentation compared to CDD procedures. It is important to have an identity verification system that is efficient and effective such as 1Kosmos BlockID to make the process easier for your business.

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