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Level 2

Prospective

Accelerate Risk Assessment & Regulatory and Financial Crime Prevention adherence with Edifice CRMS Seamless Onboarding

Know Your Customer (KYC) and Know Your Business (KYB) protocols are critical for verifying identities, mitigating risks, and ensuring regulatory compliance. Edifice empowers organizations to automate and optimize these processes, reducing operational friction while unlocking enhanced security and efficiency.
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Mitigate Financial Crime
Regulatory Compliance

Level 2 Prospective: Enhance Due Diligence Assessment

  • Tenant
  • Sub-Tenancy
  • Counterparty
  • Third Party Repository Data Risk Assesment

Level 2 Prospective services: Enhance due diligence (EDD) reviews the integrated Level 1 automated screening with manual verification and risk-driven analytics, ensuring thorough validation of counterparties, third parties, and their associated ownership structures.

This process mitigates money laundering and terrorist financing (ML/TF) risks, reduces and prevents financial crime, and addresses cross-border risks related to organised crime before approving tenants, sub-tenants, or customers for onboarding.

  • Illustrative Purposes Only: As there are other scenarios within different industry practices
  • Objective: Assess the risks associated with a counterparty’s identity, ownership structure, and transaction patterns to mitigate financial crime risk.
  • High-Risk Third Countries: Embedded in cross-border risk evaluation and third-party jurisdiction checks.
  • BVI Companies: Highlighted as a typical offshore structure requiring enhanced scrutiny in ownership and third-party workflows.
  • Risk Rating System: We assign risk ratings to tenants, sub-tenants, or customers to guide our compliance actions. This helps prioritise higher-risk cases, enabling our teams to work efficiently.
  • STR Escalation: STRs for approved counterparties/third parties if risks emerge.
Key Steps
  • Confirm legal registration of the counterparty (individual or business).
  • Validate statutory documents (e.g., business licenses, incorporation certificates).
  • Review the industry, profession, and commercial rationale for transactions.
  • Flag unclear or suspicious business activities (e.g., no clear market need).
  • Identify transactions involving high-risk jurisdictions or third countries (with weak AML/CFT frameworks and organised illicit activity hubs).
  • Screen for links to cross-border special purpose vehicle entities and other offshore entities that may be used due to their tax-exempt status to conceal hidden ownership or illicit financial flows, such as those involved in drug trafficking, fraud, or corruption.
  • Uncover ultimate beneficial owners (UBOs) and hidden beneficiaries/or behind BVI companies, trusts, or nominee director structures.
  • Screen for PEPs or illicit activity groups using offshore entities to obscure ownership.
  • Trace the origin of funds (Source of Wealth) and their use (Source of Funds).
  • Requiring audited financial statements, tax records, or anti-corruption declarations
  • Complex Structures: Offshore entities, trusts, nominee directors.
  • Large Transactions: Scrutinize funding sources and intent (e.g., crypto payments>$10k or commercial transactions >$15k ).

After validation, assign a risk rating (e.g., low/medium/high) to approved counterparties based on jurisdiction, ownership complexity, and ML/TF exposure.

Trigger STRs for: Mismatched source-of-funds documentation or modified documents post-approval. (where applicable).

  • Prevents the onboarding of entities and third parties that are undetected and have ties to ML/TF, sanctions evasion, or organised illicit activity groups and predicate offences.
  • The BVI company’s ownership chain is exposed, and transactions in the high-risk jurisdiction are flagged.
  • Reduces inadequate data management information, and monitoring systems, as well as regulatory fines, predicated offences and reputational risk.
  • Approved counterparties receive a documented risk rating to guide ongoing monitoring (Level 3).

Objective: Implement measures to verify the integrity of third-party partnerships and their transactional data, safeguarding against exploitation for illicit purposes.

Key Steps
  • Flag third parties initiating payments (e.g., sub-account payors) with ties to illicit network purposes.
  • Prevents onboarding payment arrangements to/from jurisdictions linked to smuggling or human trafficking.
  • Flag third-party activities involving payments to/from high-risk third countries or entities linked to BVI shell companies
    • High-Risk Scenarios
      • Shell Company Risks: Transactions involving BVI companies that lack physical offices or employees.
      • Jurisdictional Risks: Third parties based in high-risk third countries with lax AML enforcement.
  • Trace the origin of funds (Source of Wealth) and their use (Source of Funds).
  • Require audited financial statements, tax records, or anti-corruption declarations..
  • Confirm the role of third parties (e.g., payor, payee, intermediary).
  • Apply Enhanced Due Diligence (EDD) to relationships with unclear or high-risk characteristics.
  • Organized Crime Links: Screen for ties to illicit networks, cybercrime groups, or darknet markets.
  • Trade-Based Risks: Flag fake invoices, overpriced or underpriced goods, or mismatched shipping documents.

Assign a risk rating to third parties after assessment, reflecting factors such as geographic risk, fund-source opacity, and crime links.

Trigger STRs for: Mismatched source-of-funds documentation or modified documents post-approval. (where applicable).

  • Prevents the onboarding of entities and third parties that are undetected and have ties to ML/TF, sanctions evasion, or organised crime and predicate offences.
  • Disrupts abuse of BVI companies for layering illicit funds.
  • Flags transactions tied to high-risk third countries vulnerable to organised crime.
  • High-risk ratings trigger stricter controls (e.g., flagging shell companies in high-risk third countries).
  • Reduces inadequate data management, information, and monitoring systems, as well as regulatory fines, predicated offences and reputational risk.
  • Third parties are categorised by risk level, ensuring proportional post-approval scrutiny.
  • Audit-Ready: Risk ratings documented alongside UBO checks and sanction screenings.
  • Proactive Safeguards: High-risk entities flagged for enhanced post-approval scrutiny.
  • Proactive Safeguards: High-risk entities trigger STRs even post-approval, ensuring ongoing compliance.

The framework adheres to global regulations by ensuring transparency of ownership (FATF), compliance with crypto regulations (EU), third-party checks (Hong Kong), and enforcement of sanctions (U.S.). It prevents financial crime by stopping fraudulent trade activities, illegal crypto schemes, and abuse of fake companies.

This collaboration resource shields each Tenant’s business, its Sub-Tenants, Partners, and activities, and blocks cross-border illicit networks, ensuring compliance within its ecosystem.

Note: Level 3 Relevance: (ongoing monitoring) is excluded here but ensures post-approval compliance.

Case Study
Integration
Prospective
Relevance
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CASE STUDY (The Caribbean)

Everything you do at the poker table conveys information “Unpredictability”.

Identify the risk FINDINGS:

High-Risk unintended consequences

  • A director of a trust company business operating in Country X was approached to set up a discretionary trust by a solicitor in Country Y.
  • The solicitor advised Individual A, was acting on behalf of Individual B.
  • Individual A had received monies from the sale of a cash-intensive business, which was owned by Individual B.

Assess the level of risk CONTAINMENT:

  • The solicitor wished to hold the sale proceeds through an offshore trust. The solicitor sent through documents to identify Individual A, but none in relation to the ultimate client Individual B.
  • A few days later, over USD$500,000 was sent from the solicitor’s account to the trust company’s client account.
  • The trust was established with Individual A as the sole beneficiary and made the four payments as requested.

Understand the impact of the risk ROOT CAUSE

  • The High Court of Country X found both the trust company and the director of the trust company guilty of failing to comply with client identification requirements of the AML law, a decision which was upheld by the Court of Appeal.
  • It was held that Client identification procedures prescribed by the AML law must be kept up and that a single breach, provided that it was more than a mere oversight, is sufficient to constitute an offence.

Moving forward with confidence

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