1. Verify Identity
Identity verification is a critical first step in Enhanced Due Diligence (EDD). Confirm the identity of the person or company you are dealing with, and ensure that they are who they say they are.
2. Conduct a Risk Assessment
Conducting a risk assessment helps you identify potential risks associated with the person or company you are dealing with. This step involves looking at various factors such as location, industry, reputation, and affiliations.
3. Conduct Background Checks
Conducting background checks is an important part of EDD. This step involves checking for criminal records, bankruptcy filings, and other public records to identify any red flags.
4. Verify the Source of Funds
It is essential to verify the source of funds when dealing with high-risk individuals or companies. This step involves reviewing financial statements, bank records, and other documents to ensure that the funds are legitimate.
5. Conduct Enhanced Monitoring
Enhanced monitoring involves ongoing monitoring of the person or company to identify any changes in risk factors or behavior. This step helps you stay on top of any potential risks and take action to mitigate them.
6. Obtain References
Obtaining references can provide valuable insights into the person or company you are dealing with. This step involves reaching out to previous employers, business partners, or other relevant contacts to obtain feedback on the individual or company.
7. Conduct Onsite Visits
Onsite visits can help you verify the information and identify any potential risks. This step involves physically visiting the person or company's location to gather additional information and assess the situation.
8. Review Legal and Regulatory Compliance
Reviewing legal and regulatory compliance is essential to ensure that the person or company is not involved in any illegal or unethical activities. This step involves reviewing compliance with local and international laws, regulations, and industry standards.
9. Analyze Business Relationships
Analyzing business relationships can help you identify any potential risks associated with the person or company's network of contacts. This step involves looking at affiliations, partnerships, and other relationships to determine if they pose any risks.
10. Review Sanctions Lists
Reviewing the sanctions list is an important step in EDD. This involves checking government databases and other sources to ensure that the person or company is not on any sanctions lists, which could indicate potential risks.