What is the background of the current enhanced due diligence (EDD) regulations in the United States?
Enhanced due diligence refers to requirements promulgated under Section 321 of the Patriot Act that require financial institutions to undertake in connection with correspondent and private banking accounts maintained for non-U.S. persons. Section 321 requires all U.S. financial institutions that maintain correspondent or private banking accounts for non-U.S. persons to establish appropriate, specific and, where necessary, enhanced due diligence policies, procedures and controls (“PP&C”) that are designed to detect and report instances of money laundering through those accounts. For private banking accounts, the regulations create minimum anti-money laundering due diligence standards. These standards apply to any private banking account that is requested or maintained by, or on behalf of, a non-U.S. person.
