Around $2tn of illicit cash flows annually through the global financial systems despite the efforts of regulators and financial institutions. One way to tackle dirty money is through enhanced due diligence (EDD) which is a thorough know your customer (KYC) process that digs into transactions and customers that pose greater fraud risks.

EDD is considered to be a higher screening level than CDD and may include more information requests, including sources and funds, corporate appointments and affiliations with companies or individuals. It usually involves more thorough background checks, including media searches, in order to identify any publically available evidence or reputational evidence of criminal conduct or misdeeds that could be a threat to the bank’s operations.

The regulatory bodies have guidelines for when EDD should be triggered. It is typically based upon the nature of the transaction or the customer, and also whether the person concerned is politically exposed (PEP). However, it is up to each FI to take a subjective decision about what triggers EDD in addition to CDD.

The key is to formulate good policies that make it clear to staff what EDD needs and what it isn’t. This will allow you to avoid high-risk scenarios that can result in substantial fines for fraud. It is also essential to have a thorough process for identity verification that enables you best data rooms online secure and reliable to detect warning signs such as hidden IP addresses, spoofing technology, and fictitious identities.