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What You Need to Know About Enhanced Customer Due Diligence and AML

Cover Image for What You Need to Know About Enhanced Customer Due Diligence and AML

| Elaine Jackson

Enhanced Customer Due Diligence is a process of verifying the identity of customers and assessing their risk profile. It is an important part of Anti-Money Laundering (AML) compliance and is legally required under the Criminal Justice Money Laundering and Terrorist Financing Act 2010.

When is Enhanced Customer Due Diligence legally required?

According to the legislation, Section 37 deals with Politically Exposed Persons (PEPs) and Section 38A deals with High-Risk Third Country Individuals (HRTCIs). PEPs are individuals who have been entrusted with prominent public functions, while HRTCIs are individuals from countries that do not have adequate AML/CFT measures in place. Enhanced Customer Due Diligence is also required when a customer is deemed to be high-risk by the business.

What documentation Needs to Be Obtained?

The basic documentation to be obtained during Enhanced Customer Due Diligence includes identification documents such as passports, driver’s licenses, utility bills, and bank statements. Additional information may also be requested depending on the risk profile of the customer.

What is the Difference Between Normal Due Diligence and Enhanced Due Diligence?

The key distinction between Normal Due Diligence and Enhanced Due Diligence is the level of scrutiny applied to the customer. During Normal Due Diligence, basic customer information is collected and verified, while during Enhanced Due Diligence, additional information is collected and more detailed checks are conducted.

Types of Ongoing Monitoring

This includes periodic reviews of customer information and transaction monitoring. These activities help to ensure that customers remain compliant with AML/CFT regulations.

In conclusion, Enhanced Customer Due Diligence is an important part of AML/CFT compliance and should be carried out under the relevant legislation. It is important to understand when it is legally required, the basic documentation to be obtained, the key distinction between Normal and Enhanced Due Diligence and the types of ongoing monitoring.

If you’d like to find out more about AML and Enhanced Customer Due Diligence, you can reach out to Elaine Jackson at [email protected].

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About the Author

As a member of our Practice Support team, Elaine’s focus is on providing firm’s with assistance and training in the following areas; Anti-Money Laundering, Audit Testing and Walk Through Procedures, Audit Planning and Efficiency, OmniPro Audit Working Paper Demos, Preparing for Monitoring Visits and Post Monitoring Visit follow-ups. Elaine has over 15 years Accountancy Practice experience which has provided her with a wealth of knowledge across all industries and sectors. Elaine is an AITI Chartered Tax Advisor, a Certified Public Accountant and holds a Diploma in Corporate Finance. In her previous roles, Elaine has experienced a number of ACA and ACCA monitoring reviews. This experience has provided Elaine with a great understanding and appreciation for the challenges facing Accountants in practice today. link to

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