When Is Enhanced Due Diligence Required and What Are the Standard Procedures? – Warm greetings to all customers and readers across Indonesia! Are you seeking comprehensive information on when and how to perform Enhanced Due Diligence (EDD)? If so, you’ve come to the right place. SIEMA KONSULTAN is here to provide an in-depth explanation of proper EDD implementation according to standards and procedures. This article aims to help you understand the importance of EDD in business and compliance, ensuring that the steps you take are in accordance with Indonesian regulations. Let’s explore the essential information about Due Diligence and Enhanced Due Diligence together.

In the business world, especially related to finance, investments, or international transactions, Due Diligence is a crucial process conducted to verify and confirm information about prospective partners, customers, or specific transactions. Its main purpose is to mitigate risks, prevent money laundering, terrorist financing, and ensure that business activities comply with applicable laws in Indonesia and internationally.

On the other hand, Enhanced Due Diligence (EDD) is a more in-depth and stringent process compared to standard Due Diligence. EDD is typically performed when there are high-risk indicators associated with the customer or transaction. In other words, EDD is used to ensure that potential risks are well-managed and comply with anti-money laundering and counter-terrorism financing (AML/CFT) standards.

When and Why Is EDD Required?

The use of Enhanced Due Diligence is not arbitrary. Certain conditions and risk indicators necessitate a more thorough EDD process. Here are common situations where EDD must be applied:

1. Transactions with High-Risk Customers

If a customer or business partner originates from a high-risk country related to money laundering and terrorist financing, or possesses a suspicious profile, then strict EDD must be conducted.

2. Large and Unusual Transactions

Transactions involving large amounts that do not match the customer’s profile or are unusual and suspicious are primary indicators that EDD is necessary.

3. Customers with Unclear Identities

If customer identities are difficult to verify or there’s ambiguity regarding their source of funds or business activities, EDD should be performed.

4. Specific Industries and Sectors

Some sectors such as finance, real estate, and international trade carry higher risks of money laundering and terrorist financing. In these sectors, applying EDD becomes mandatory.

5. New Customers and Recurring Transactions

For new customers conducting large and recurring transactions, EDD is required to ensure they meet compliance criteria.

Standard Procedures in Implementing EDD

To ensure effective and compliant EDD implementation, here are the general steps that should be followed:

1. In-Depth Information Gathering

The first step is collecting comprehensive data about the customer’s identity, source of funds, business activities, and risk profile. This includes official documents such as ID cards, tax identification numbers, company documents, financial reports, and supporting documents.

2. Data Verification

Once data is collected, verify the authenticity and validity of these documents. Utilizing trusted third-party verification services or official agencies is highly recommended.

3. Risk Assessment

Next, conduct a risk assessment related to the customer profile and transactions. This involves evaluating geographic factors, industry, transaction patterns, and funding sources.

4. Ongoing Monitoring

EDD is not a one-time process. Continuous monitoring of customer activities and transactions is crucial to identify potential new risks.

5. Reporting and Documentation

All procedures must be thoroughly documented and stored as proof of compliance. If suspicious activity is detected, proper reporting should be made according to applicable regulations.

6. Follow-up Actions

If the risk is deemed high, the company must take action such as limiting transactions, requesting additional confirmation, or even rejecting the customer/transaction.

Regulations and Standards Concerning EDD in Indonesia

In Indonesia, the implementation of Due Diligence and Enhanced Due Diligence is regulated by various regulations, including:

• Financial Services Authority (OJK) Regulations – related to supervision of financial institutions.
• Bank Indonesia (BI) Regulations – related to payment systems and banking supervision.
• Law No. 8 of 2010 on Prevention and Eradication of Money Laundering Crimes.
• Minister of Finance Regulations and the Indonesian Financial Transaction Reports and Analysis Center (PPATK) – concerning suspicious transaction reporting and adherence to KYC (Know Your Customer) standards.

Applying EDD in accordance with these regulations is essential for companies to remain compliant and protected from legal or reputational risks.

Why Conduct EDD Professionally?

Performing Enhanced Due Diligence is not only about regulatory compliance but also involves deep risk analysis and resource utilization. Mistakes in EDD application can have serious consequences, including hefty fines, legal sanctions, and reputational damage.

Therefore, many companies choose to collaborate with experienced and professional consultants in Due Diligence. They are capable of providing comprehensive, accurate, and standards-compliant services aligned with both international and local regulations.

SIEMA KONSULTAN: Your Trusted Partner for Due Diligence Services in Indonesia

If you need professional and reliable Due Diligence services across Indonesia, SIEMA KONSULTAN is your best choice. With extensive experience and expertise in compliance and due diligence, we are ready to assist your company in conducting in-depth risk assessments according to applicable standards.

Our office is located at Sampoerna Strategic Square South Tower, Level 30, Jl. Jend. Sudirman Kav. 45, Jakarta 12930, Indonesia. For a free consultation and to discuss your needs, please contact us via phone/WhatsApp at 0813 1114 2228. Partnering with SIEMA KONSULTAN ensures you receive trustworthy services and optimal solutions for Due Diligence and Enhanced Due Diligence.

Performing Enhanced Due Diligence is a crucial step that must be carried out professionally and accurately to safeguard your business and comply with regulations. Understanding when and how to implement EDD enables companies to protect themselves from legal and reputational risks.

Don’t hesitate to consult with SIEMA KONSULTAN, a trusted leader in due diligence and compliance in Indonesia. Contact us today and ensure your business operates in accordance with the highest standards and regulations!

For more information

Please visit:

www.siemakonsultan.com

Jakarta Office:

Sampoerna Strategic Square

South Tower Level 30,

Jl.Jend.Sudirman Kav.45

Jakarta Selatan – DKI Jakarta

Bali Office: 

Jl. Cokroaminoto No.212,

Ubung, Denpasar Utara,

Bali – Indonesia

Contact Us:

Imam Budiharto
imam@siemakonsultan.com

Telpon: 021 2992 7844

Whatsapp: 0813 1114 2228