Enhanced Due Diligence
Enhanced due diligence is required where the customer and product/service combination is considered to be of greater risk. This higher level of due diligence is required to mitigate the increased risk.
A high-risk situation generally occurs where there is an increased opportunity from money laundering or terrorist financing through the service or product you are providing or your customer.
What the enhanced due diligence actually entails will be dependent 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, source of income, or perhaps an adverse media check. The checks should be relative and proportionate to the level of risk identified, provide confidence that any risk has been mitigated and that the risk is unlikely to be realised.
There are several situations that can be counted as high risk such as where you do not meet your customer face-to-face or where you are dealing with a politically exposed person. A high-risk customer does not mean that they will be involved in money laundering or other criminal activity, but that there is an increased opportunity for them to potentially be involved.