Due diligence is a vital part of AML compliance, particularly for businesses that deal with high-value transactions or customers who are at risk of money laundering or financial criminal. It helps identify the most risky customers and prevent them from funding terrorist groups as well as other criminal organizations.

While the standard customer due diligence is designed to verify the identity of a customer However, the EDD procedure is more comprehensive and requires a greater variety of checks. This includes collecting more identification documents as well as performing thorough checks on the client’s location and the source of their funds. Due diligence is typically applied to high-risk clients, for instance, politically-exposed individuals (PEPs) or those who reside in high-risk countries, as well as businesses or individuals who depend heavily on cash.

The more complex the individual, legal entity or transaction, the more comprehensive the EDD process should be. Regulators generally prefer a risk-based approach, which virtual data room pricing what you need to know employs documented risk assessment procedures to determine the amount of scrutiny required for each case. The EDD process includes gathering more comprehensive data like information about the person’s clients and suppliers as well as corporate/legal structures and legal structures. EDD procedures are more expensive and time-consuming. They also require more detailed documentation than CDD procedures. It is important to have an identity verification system that is both effective and efficient like 1Kosmos BlockID to make the process simpler for your company.