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Enhanced Due Diligence
Under the money laundering regulations, regulated firms are required to take a risk-based approach to Customer Due Diligence and ongoing monitoring. As a result, Enhanced Due Diligence (EDD) - further and more detailed checks - must be undertaken if an individual or business customer is considered a greater risk. The types of customers that firms will need to perform EDD on are those linked to higher-risk countries or business sectors, those with unnecessarily complex or opaque beneficial ownership structures, and customers who have been associated with unusual, complex or purposeless transactions.
EDD will also need to be undertaken if the person's name or any of their close associates' names match with any Sanctions, PEP, RIP of RCA lists. PEPs - Politically Exposed Persons - are individuals whose prominent position in public life could make them more vulnerable to corruption.
There are no specific guidelines around what EDD should entail, just that the checks should be ‘relative and proportionate’ to the level of risk that has been identified. Generally, it will include further checks with Sanctions, PEP, RCA and SIP lists, adverse media profiling and biography checks. For a firm to be able to work with a customer that has been identified for Enhanced Due Diligence, any further checks need to provide the firm with the confidence that any risk has been mitigated.
The SmartSearch platform performs Sanction, PEP, SIP and RCA screening with every AML check and automatically undertakes due diligence on any matches, while the daily monitoring service ensures firms are alerted to any changes in a person's status.
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