Enhanced Due Diligence Checklist

Who are High-Risk Customers?

High-risk customers are individuals or entities that, due to specific characteristics or circumstances, pose an elevated level of risk for businesses or financial institutions. These customers may be more likely to engage in activities associated with money laundering, financial crimes, or other illicit behavior. Identifying and managing high-risk customers is a crucial aspect of compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

Types of high-risk customers

Here are some categories of high-risk customers:

  1. Politically Exposed Persons (PEPs): Individuals who hold or have held prominent public positions, along with their immediate family members and close associates, are considered high-risk due to their potential influence and susceptibility to corruption or bribery.
  2. Clients with Criminal Ties: Individuals or entities that have been linked to financial crimes, such as fraud, embezzlement, or money laundering, are considered high-risk customers.
  3. Cash-Intensive Businesses: Businesses that primarily deal in cash transactions, such as casinos, money service businesses, or pawnshops, are at higher risk for money laundering due to the ease with which cash can be used for illicit purposes.
  4. Non-Face-to-Face Interactions: Online platforms or businesses that facilitate transactions without direct customer interaction (e.g., online marketplaces, cryptocurrency exchanges) are considered high-risk due to the challenges in verifying customer identities and tracking the source of funds.
  5. Businesses in High-Risk Countries: Operating in countries with a history of active sanctions, high levels of corruption, or links to terrorism can increase the scrutiny level and categorise customers from those regions as high-risk.
  6. Private Banking Clients: Wealthy individuals or families who have substantial financial resources are often subjected to enhanced due diligence due to the potential for complex financial arrangements and the higher risks associated with significant financial transactions.
  7. Unexplained Business Relationships: Relationships that lack clarity or rationale, such as offshore firms serving distant locations without an apparent business purpose, may signal underlying risks.
  8. Complex Business Structures: Businesses with intricate or opaque ownership structures that make it difficult to identify the ultimate beneficiaries may pose higher risks and require enhanced due diligence.

It’s important for businesses and financial institutions to implement thorough due diligence measures, including Enhanced Due Diligence (EDD), when dealing with high-risk customers. This helps to mitigate potential risks, ensure regulatory compliance, and safeguard against legal, financial, and reputational repercussions.

Read more in our EDD Checklist 2024 Guide for High-Risk Customers.

Enhanced Due Diligence Checklist

Enhanced Due Diligence Checklist

Enhanced Due Diligence Checklist – Best practices & step by step guide for KYC, AML, fraud prevention & more.


About Neotas Enhanced Due Diligence

Neotas Platform covers 600Bn+ archived web pages, 1.8Bn+ court records, 198M+ corporate records, global social media platforms, and 40,000+ Media sources from over 100 countries to help you build a comprehensive picture of the team. It’s a world-first, searching beyond Google. Neotas’ diligence uncovers illicit activities, reducing financial and reputational risk.

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Neotas Enhanced Due Diligence

Neotas Enhanced Due Diligence covers 600Bn+ Archived web pages, 1.8Bn+ court records, 198M+ Corporate records, Global Social Media platforms, and more than 40,000 Media sources from over 100 countries to help you screen & manage risks.

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