Enhanced Due Diligence (EDD)
What Enhanced Due Diligence means, when it's required, and what additional measures EDD involves for high-risk relationships.
2 min read
Enhanced Due Diligence (EDD) refers to additional verification measures applied to higher-risk customers, transactions, or jurisdictions where standard CDD is insufficient.
When EDD Is Required
Customer Triggers
- PEP (Politically Exposed Person) status
- Complex or opaque ownership structures
- Adverse media or screening hits
- Cash-intensive business models
- Unusual transaction patterns
Geographic Triggers
- FATF grey-listed or black-listed jurisdictions
- Countries subject to sanctions
- High-corruption jurisdictions
- Tax havens and secrecy jurisdictions
Product/Transaction Triggers
- Private banking relationships
- Correspondent banking
- High-value or unusual transactions
EDD Measures
| Measure | Purpose |
|---|---|
| Source of Funds | Where does money for specific transactions come from? |
| Source of Wealth | How did the customer accumulate their wealth? |
| Deeper Ownership Investigation | Trace through all layers to natural persons |
| Senior Management Approval | Executive sign-off on high-risk relationships |
| Increased Monitoring | More frequent and intensive transaction review |
| Additional Documentation | More extensive record requirements |
EDD in Practice
EDD isn’t optional when risk indicators are present—regulations require proportionate measures. The risk-based approach means organizations must define clear EDD triggers and document the additional measures applied.
See Enhanced Due Diligence for implementation details.