The standard process of due diligence on the part of the customer may not be sufficient for high-risk customers. This is the reason why increased due diligence is needed: it involves deeper why the best data room services can not help your business studies to assess the potential for terrorist financing and money laundering risks. EDD research can help businesses comply with the law and protect their reputation.
Imagine that someone downloads your app to open an account for the first time. They’ve cleared the identity verification tests, and your examination of their financial records hasn’t given any red flags. It’s good news, but there could be negative news. This is because the customer could be a part of an illegal enterprise trying to smuggle money through illicit activities such as drug trafficking, corruption or terrorist acts. It’s important for banks to carry out risk-based due diligence in relation to new and existing clients.
EDD is required in a variety of cases for companies operating in high risk sectors, high risk countries, or any other industry requiring special scrutiny. EDD searches can include a search on criminal watchlists in order to ensure that the business does business only with individuals or companies that are banned by regulatory bodies.
A typical EDD investigation will contain information such as a detailed background profile of the client, the source and destination for the funds as well as other indicators of financial crimes such as the presence of PEPs, financial criminals or adverse media. Additionally, it can include information about a customer’s beneficial ownership structure. This includes the identity of the people who have control over or are the owners of the legal entity as well as the sources of wealth and money.