Every year around $2tn in illicit cash flows into the global financial system, despite the efforts of regulators and financial institutions to stop the financing of terrorists and money laundering. One way to fight dirty money is with enhanced due diligence (EDD) which is a thorough know your customer (KYC) process that digs VDRs: the touchstone of excellence in business data management into transactions that carry greater risk of fraud.

EDD is generally considered to be a higher degree of screening than CDD and may require more information requests, including sources of funds and wealth corporate appointments, affiliations with other individuals and companies. It often involves more thorough background checks, such as media searches, to determine if there is any publicly accessible evidence or evidence of reputational proof of misconduct or criminal activity that could pose a threat to the bank’s operations.

The regulatory bodies have guidelines for when EDD should trigger. This is typically contingent on the type of transaction or customer, as well as whether the individual in question is politically exposed (PEP). It is up to each FI whether they would like to include EDD to CDD.

It is important to have policies that clearly communicate to employees what EDD expects and what it doesn’t. This will help to avoid situations that are high-risk and could lead to hefty fines for fraud. It’s also vital to have a thorough identity verification procedure that allows you to spot suspicious IP addresses, spoofing technologies and fake identities.