Under the BSA, all US financial institutions 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 financial institutions 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, SIP or RCA lists.
There are no specific guidelines around what EDD should entail, but it will usually include further checks with Sanction, PEP, RCA and SIP lists, Adverse media profiling and biography checks. It is not illegal to work with someone who is a PEP, RCA or SIP but Enhanced Due Diligence must be performed to provide the firm with the confidence that any risk has been mitigated.
SmartSearch automatically performs sanction, PEP, SIP and RCA screening on every AML check and automatically undertakes enhanced due diligence on any matches, while the daily monitoring service checks for any changes and alerts where necessary.