How much do you know about the enhanced customer due diligence (ECDD) program? Read on to learn more about this important risk-based approach and how to identify high-risk customers. A recent investigation discovered billions of dollars of money laundering through pubs and clubs in New South Wales. Investigators also found that many club boards, hoteliers, …
Enhanced Customer Due Diligence (ECDD) is a process that financial institutions and other businesses in Australia use to identify, verify, and assess their customers’ identities and the potential risks associated with them. It is an advanced form of Customer Due Diligence (CDD) that involves collecting additional information and performing other checks on customers with higher risk.
ECDD is required by Australian law under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). It is typically needed when dealing with politically exposed (PEPs) customers, high-net-worth individuals, or those involved in high-risk industries such as gambling or real estate.
The ECDD process involves collecting additional information about a customer’s identity, source of funds, and business activities, as well as performing more extensive background checks, including checking sanctions lists and politically exposed person lists. This process aims to mitigate the risk of money laundering, terrorist financing, and other financial crimes.
Businesses that are required to perform ECDD must have systems and processes in place to identify and manage customers who require enhanced due diligence. Failure to comply with ECDD requirements can result in significant penalties and legal consequences.