Enhanced Due Diligence (EDD) is a key part of the inter-governmental Financial Action Task Force (FATF) recommendations and the EU’s 4th Money Laundering Directive designed to guide organisations in how to manage those higher risk customers. For example, it is a requirement that financial institutions undertake additional ‘Know Your Customer’ checks beyond their standard Customer Due Diligence processes to ensure that customer funds are not being inappropriately used in laundering money or for terrorist activities.
Many organisations, especially those in the financial services industry, electronically screen their customers against a variety of data sources during a customer’s initial sign up for a new current or savings account, personal loan or other service with a view to mitigating associated risks and meeting their regulatory obligations. But what happens where a higher risk is flagged from those initial checks and the organisation is required to perform an EDD investigation?
No EDD Investigation is ever the same. It’s the unique nature of a business, associated individuals, organisation structure and relationships that means its inherently complex to identify key risk indicators, including the ultimate beneficial owner and source of funds associated. For example, when a Director is identified as a Political Exposed Person (PEP) establishing the network of business and family relationships, the level of risk associated with them can be difficult and time consuming process. Some organisations operate multiple teams across their business to manually pull this information together to build a picture that gives confidence in their decision and allows them to demonstrate to the regulator that EDD has been appropriately applied.
EDD must be based on the reliable fusion of information from a variety of relevant sources that are accessible to the entity responsible for undertaking the diligence. This includes information on land ownership, company office bearers and shareholdings, credit history and adverse reports together with verification that a person is a PEP or is present on a Sanction list and other reassurance on appropriate compliance. With such a wide variety of data sources and detail to investigate, joining the dots and reducing the risk of manual error in doing so represents a significant challenge.
Encompass offers considerable benefits in any EDD investigation by:
In addition, Encompass has a strong research program looking at new intelligent technologies. I hope to elaborate on some of these over coming months
Richard a consulting scientist at Encompass and is an Adjunct Professor in Computer Science at the Australian National University. He wrote his first significant computer program (to do his algebra) as part of his PhD. He studied at Dublin University (Trinity College Dublin) and was awarded a 1st Class Honours degree in Mathematics and a Doctor of Philosophy.
Encompass’ intelligent process automation conducts live document and data collection, analysis and integration from public and premium sources to bring transparency to complex corporate structures and ultimate beneficial ownership, delivering the most accurate and complete KYC on demand.