It measures to mitigate risk and the necessary documents in cases identified for enhanced due diligence for high-risk cases in anti-money laundering (AML) contexts. I’ll also explain briefly what high-risk cases are.
Practical Measures to Mitigate AML Risk
Risk Assessment: Regularly conduct risk assessments to identify potential areas of vulnerability in your organization.
Customer Due Diligence (CDD): Implement thorough CDD measures to know your customer (KYC) and understand their financial behaviors.
Enhanced Due Diligence (EDD): For high-risk customers, conduct EDD by obtaining additional information about the customer and their transactions.
Transaction Monitoring: Continuously monitor customer transactions for suspicious activities.
Compliance Training: Regularly train employees on AML regulations and the importance of compliance.
Record Keeping: Maintain detailed records of customer identification, verification, and transactions.
Reporting Suspicious Activities: Implement a robust system for reporting suspicious activities to relevant authorities.
Documents Required for Enhanced Due Diligence
In cases of EDD, particularly for high-risk customers, the following documents and information are typically required:
Proof of Identity: Government-issued ID, passport, or driver’s license.
Address Verification: Utility bills, bank statements, or government correspondence.
Source of Funds: Documents showing the origin of the funds, like pay slips, bank statements, or tax returns.
Business Information: For corporate clients, business registration documents, articles of incorporation, and information about beneficial owners.
Financial Statements: Audited financial statements for corporate clients.
Background Checks: Reports from third-party agencies detailing the customer’s financial history and potential political exposure.
Ongoing Monitoring: Regular updates of the documents and information based on transaction patterns and changes in customer profiles.