What is Enhanced Customer Due Diligence?

Enhanced CDD (ECDD), as defined by section 20 (1) of the AMLTF Code of Practice, refers to the additional steps an FI or DNFBP is required to take when dealing with applicants for business, customers, and one-off transactions that present a higher risk. ECDD may include:

• undertaking research to understand the background and the business of the applicant for business or customer, and verifying this information (e.g. using open-source intelligence available through public databases, websites etc.);
• obtaining evidentiary documentation to confirm the source of funds or source of wealth of the applicant for business or customer, including the beneficial owners, and verifying this information (e.g. asset and income declarations);
• obtaining senior management approval to commence or continue the business relationship with a higher risk applicant for business or customer;
• requiring senior management sign-off when engaging in transactions with a higher risk applicant for business or customer; and
• conducting enhanced monitoring of the business relationship (e.g. increasing the number and timing of controls applied and frequency of reviews, obtaining information on the reasons for a particular transaction, and selecting patterns of transactions that need further examination).

Each FI or DNFBP should adapt the enhanced measures based on the specific risks associated with its customer base.