Enhanced Due Diligence - The Complete BSA/AML Desktop Reference by Stephen L. MariniFinally, there is a one-stop Enhanced Due Diligence reference source! This book clearly presents methods for risk assessing customers and developing policies, procedures and controls for implementing a sustainable AML enhanced due diligence compliance program. The book not only addresses risk models, risk categories and risk elements, but also provides detailed information regarding specific high risk customer types. The Desktop Reference contains sample EDD reviews and everything you need to develop and maintain your EDD program, train your staff, and reduce regulatory risk. This book also teaches how to risk assess different customer types, how to conduct customer on-boarding EDD, and how to conduct ongoing EDD reviews. Sample EDD reviews include those for: Cash Intensive Businesses, Charities and NGOs, Foreign Correspondent Banks, and Private Banking Customers. Also covered are: MSBs and NBFIs, Senior Foreign Political Figures, Non Resident Aliens, and generic high risk customer types.
The difference between Customer Due Diligence and Enhanced Due Diligence
The identity and regulatory landscapes are a minefield of three-letter acronyms and abbreviations. CDD is a critical element of effectively managing risk and protecting you, and your business, against potential association or involvement with financial crimes and nefarious activities.
Stephen L. Marini
Innovations in Identity
What are effective enhanced due diligence procedures you can use to minimize risk and maintain effective compliance standards when onboarding high-risk customers? It starts by taking steps to ensure you know who you are dealing with, understanding their activities and assessing their risk of money laundering. Gathering fundamental identifying information and validating that information is the first step to CDD compliance and reducing risk. After that, you need to determine what is normal and expected activity for that prospective account-holder? These determinations might be based on a customer classification system that you have put in place or on the type of account; either way, with a risk-based approach, clearly defined policies makes it easier for staff to implement analysis and compliance staff to report to regulators, if necessary. Similarly, any Politically Exposed Persons PEPs or their close associate or family members also must go through the more thorough examination process.
With the new Customer Due Diligence CDD rule in effect, financial institutions have been working tirelessly on collecting beneficial ownership information. While beneficial ownership is a major focal point, it is still very important to remember all that CDD entails. Are you doing enough enhanced due diligence EDD on them? The bones of your current EDD program might be fine, but with so many technological and regulatory changes, it is important to take a step back and look at the big picture to see where you can create efficiencies within your program. When revising your EDD program, it is crucial to consider these three things:.
Creating new business partnerships with individuals or organizations without fully knowing their past and present business dealings, can expose your organization to lawsuits and regulatory fines. However, accessing accurate information about compliance on the web is not always free and in most cases the information is cumbersome. Our years of expertise working together with numerous clients across various industries gives us an upper hand in the KYC compliance business, so here is our simplified approach. What is KYC? The KYC process is usually carried out by companies and other financial institutions when opening accounts with them. Enhanced Due diligence is a KYC process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by Customer Due Diligence.
Requiring all banks to adopt the same program would be unrealistic, especially for mid-size or smaller banks.
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This higher level of due diligence is required to mitigate the increased risk. What the enhanced due diligence actually entails will be dependant on the nature and severity of the risk. The additional due diligence could take many forms from gathering additional information to verify the customers identity or source of income or perhaps an adverse media check.