Enhanced Due Diligence Checklist for AML

An Enhanced Due Diligence (EDD) checklist for Anti-Money Laundering (AML) purposes should be comprehensive and tailored to the specific risks associated with the customer or transaction.

Here are some key elements that should be included in the Enhanced Due Diligence Checklist for AML:

1. Customer Identification and Verification:
   • Verify the customer’s identity using reliable and independent sources
   • Obtain and validate identification documents (e.g., passport, national ID)
   • Conduct a thorough background check on the customer
2. Beneficial Ownership Identification:
   • Identify and verify the ultimate beneficial owners of the legal entity
   • Understand the ownership and control structure of the entity
3. Source of Funds/Wealth:
   • Determine the source of the customer’s funds or wealth
   • Obtain and verify supporting documentation (e.g., bank statements, tax returns)
   • Assess the plausibility and legitimacy of the declared sources
4. Risk Assessment:
   • Conduct a comprehensive risk assessment of the customer
   • Consider factors such as country risk, industry risk, and the customer’s profile
   • Assign an appropriate risk rating (e.g., low, medium, high)
5. Adverse Media Screening:
   • Perform thorough adverse media screening on the customer and related parties
   • Identify any potential links to criminal activities, sanctions, or negative news
6. Network Analysis:
   • Map and analyze the customer’s business relationships and networks
   • Uncover any potential connections to high-risk individuals or entities
   • Leverage advanced technologies like natural language processing (NLP)
7. Ongoing Monitoring:
   • Implement ongoing monitoring of the customer’s activities and transactions
   • Review and update the customer’s risk profile periodically
   • Identify any suspicious or unusual patterns of activity
8. Documentation and Record-Keeping:
   • Maintain comprehensive documentation of the EDD process
   • Keep records of all information obtained and decisions made
   • Ensure compliance with regulatory requirements for record retention

It’s crucial to tailor the EDD checklist to the specific risks associated with the customer or transaction. For example, if the customer is a politically exposed person (PEP) or operates in a high-risk industry, additional due diligence measures may be necessary.

By implementing a robust EDD checklist, organisations can demonstrate a commitment to combating money laundering and terrorist financing, while also protecting their reputation and ensuring compliance with AML regulations. Failure to conduct adequate due diligence can result in severe consequences, including regulatory fines, reputational damage, and potential legal liabilities.

About Neotas Enhanced Due Diligence