Question: What Is Enhanced Due Diligence UK?

What is AML and its stages?

Traditionally it has been commonly accepted that the money laundering process comprises three main stages: a) Placement.

b) Layering.

c) Integration..

What is the difference between KYC and CDD?

KYC vs. CDD: When are they used? For regulated entities, the KYC checks that sufficed in the past have now developed into CDD programmes, and the main difference between KYC and CDD, apart from the emphasis on the source of funds, is that the CDD checks continue throughout the client relationship.

Who is a high risk customer?

Higher Risk Customers are those who are engaged in certain professions or avail the banking products and services where money laundering possibilities are high. Financial Institutions conduct enhanced due diligence (EDD) and ongoing monitoring for the higher risk customers.

What is KYC verified?

KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC check is the mandatory process of identifying and verifying the identity of the client when opening an account and periodically over time. In other words, banks must make sure that their clients are genuinely who they claim to be.

What is difference between CDD and EDD?

CDD aims at collecting data about customers’ identity and contact information as well as measuring their risk. EDD is used for high-risk customers, aka those who are more likely to implement related to money laundering and terrorism financing activities due to the nature of their business or transactions.

What are the 3 components of KYC?

To create and run an effective KYC program requires the following elements: Customer Identification Program (CIP) How do you know someone is who they say they are? … Customer Due Diligence. … Ongoing Monitoring.

What is the difference between customer due diligence and enhanced due diligence?

What is the difference between CDD and EDD? The difference between Customer Due Diligence and Enhanced Due Diligence is that CDD is a less strict verification procedure where you obtain the customer’s identity, address and evaluate the risk category of the customer.

Which of the following are subject to enhanced due diligence?

Enhanced Due Diligence factors Occupation or nature of business. Purpose of the business transactions. Expected pattern of activity in terms of transaction types, dollar volume and frequency. Expected origination of payments and method of payment.

What is a customer due diligence?

Customer Due Diligence (CDD) information comprises the facts about a customer that should enable an organisation to assess the extent to which the customer exposes it to a range of risks. These risks include money laundering and terrorist financing.

How do I get KYC verified?

You can also complete your KYC formalities by visiting an AMC office or to any registrar’s (CAMS/Karvy, and so on) point of sale or to any independent financial advisor. Take KYC application form, fill it and submit it along hard copies of required documents.

What is enhanced due diligence?

Enhanced due diligence (EDD) 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. EDD goes beyond CDD and looks to establish a higher level of identity assurance by obtaining the customer’s identity and …

What is enhanced due diligence checklist?

Enhanced Due Diligence (“EDD”) is additional information collected for higher-risk customers to provide a deeper understanding of customer activity to mitigate associated risks. Customer risk assessments can be used to determine which level of due diligence to apply.

What are examples of money laundering?

Common Money Laundering Use CasesDrug Trafficking. Drug trafficking is a cash-intensive business. … International Terrorism. For ideologically motivated terrorist groups, money is a means to an end. … Embezzlement. … Arms Trafficking. … Other Use Cases.

What are considered higher risk customer types for money laundering?

There are high-risk customers your institution may be more familiar with, such as cash intensive businesses, nonresident aliens, foreign individuals, politically exposed persons (PEPs), and money service businesses (MSBs); however, there are also other high-risk customers to consider, such as nonbank financial …

What does know your customer KYC due diligence involve?

Know Your Customer (KYC) is the process of gathering information and data in order to verify the identity of clients and make sure that they are not involved with money-laundering or another type of financial crime.

What are the 3 stages of AML?

There are usually two or three phases to the laundering: Placement. Layering. Integration / Extraction.

What are the levels of customer due diligence?

There are three levels of customer due diligence: standard, simplified and enhanced.

What is the AML rule?

Firms must comply with the Bank Secrecy Act and its implementing regulations (“AML rules”). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.

What is standard due diligence?

Standard due diligence requires you to identify your customer as well as verify their identity. … This due diligence should provide you with confidence that that you know who your customer is and that your service or product is not being used as a tool to launder money or any other criminal activity.

How do you identify a beneficial owner?

Financial Action Task Force defines Ultimate Beneficial owner as the natural person(s) who ultimately owns or controls a customer or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.

When enhanced due diligence is required?

Enhance Due Diligence is required where the customer and product/service combination is considered to be a greater risk. This higher level of due diligence is required to mitigate the increased risk.