What does 'Due Diligence' mean?

Due Diligence in the context of Anti-Money Laundering (AML) refers to the process of investigating and verifying the identity and background of customers, partners, or transactions to assess potential risks related to money laundering or terrorist financing. AML software incorporates due diligence features to automate the collection of relevant data, including Know Your Customer (KYC) information, credit history, and sanctions lists. By conducting thorough due diligence, the software helps organizations assess the legitimacy of business relationships and transactions, ensuring compliance with regulatory requirements and reducing the risk of engaging in illegal activities. This feature is critical for mitigating financial crime risks in real time.