This involves gathering information to assess the risk that a client might be involved in illicit activity. EDD often involves obtaining senior management approval to establish the relationship, conducting more intensive ongoing monitoring of the account, and obtaining more detailed information about the source of funds and wealth.
Document Verification Methods to Ensure Patriot Act Compliance
This program requires institutions to verify the identity of any individual attempting to open an account or conduct specific financial transactions. Ongoing Monitoring and Suspicious Activity Reporting Compliance does not end once an account is opened; it is a continuous process.
For compliance professionals, this means navigating a complex landscape of rules designed to increase transparency without stifling legitimate business operations. This involves analyzing transaction patterns to identify deviations that might indicate money laundering, such as structuring deposits to avoid reporting thresholds or moving funds in a way that lacks a clear business purpose.
Document Verification Methods for Patriot Act Compliance
Compliance Component Primary Purpose Key Action Required Customer Identification Program (CIP) Verify Identity Collect identifying information (name, DOB, ID number) Customer Due Diligence (CDD) Assess Risk Identify beneficial owners of legal entities Enhanced Due Diligence (EDD) Mitigate High Risk Senior management approval and ongoing monitoring Suspicious Activity Reporting (SAR) Report Illicit Activity File reports for transactions lacking legal purpose Technological Integration and Recordkeeping. Enhanced Due Diligence for High-Risk Clients For clients deemed high-risk—such as foreign entities, politically exposed persons (PEPs), or those involved in specific jurisdictions—standard due diligence is insufficient.
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