Due diligence is an essential element of AML compliance, particularly for businesses that deal with significant transactions or customers that are at risk of money laundering and financial criminal. It is used to identify the most prone customers and prevent them from donating to terrorist organizations as well as other criminal organizations.
The EDD process is why the best data room services can not help your business more thorough than regular due diligence and involves the use of a wider array of checks. These include collecting more identification documents, performing strict verification of these IDs and conducting thorough investigations to confirm the location of a client as well as the source of funds, established business relationships, and others. Due diligence is typically used for high-risk clients for instance, politically-exposed individuals (PEPs) and those from high-risk countries, as well as businesses or individuals who depend heavily on cash.
The EDD process should be more comprehensive the more complicated a person, legal entity or transaction is. Regulators typically prefer the risk-based approach that employs documented risk assessment policies in order to determine the degree of scrutiny required for each situation. The EDD process includes gathering more detailed information that include information on the person’s clients and suppliers legal structures, corporate/legal entities, and legal structures. EDD procedures are typically more expensive, time-consuming and demanding of greater documentation compared to CDD procedures. It’s important to have an identity verification system that is efficient and effective, such as 1Kosmos BlockID to make the process more efficient for your business.