Enhanced due diligence, or EDD, is additional investigation and oversight applied when a customer, relationship or transaction presents elevated financial-crime risk. It builds on ordinary customer due diligence. EDD is not a single document or universal checklist; the measures should address the specific risk factors identified.
What can trigger enhanced due diligence?
Triggers depend on the institution’s policy and applicable requirements. Examples can include a complex ownership structure, activity involving a higher-risk jurisdiction, a politically exposed person, unclear source of funds, unusual transaction behavior or information that conflicts with the stated business profile.
A trigger should prompt proportionate review. It does not by itself establish that the person or transaction is prohibited or improper.
What does an EDD review add?
- More detailed ownership and control analysis
- Additional verification of business activity and economic purpose
- Review of source of funds and, where relevant, source of wealth
- Targeted adverse-information research and screening resolution
- Senior or specialist approval before establishing or continuing the relationship
- More frequent profile refreshes or closer transaction monitoring
How should the review be documented?
Record the risk factor, evidence requested, sources consulted, discrepancies found, explanations obtained, approval authority, decision and monitoring plan. A clear file distinguishes verified facts from customer statements and analyst judgment.
EDD vs. customer due diligence
Customer Due Diligence establishes the customer, relationship and baseline risk profile. EDD deepens that work when the assessed risk warrants it. It should not replace basic identification and verification, and it should not become a generic request for more documents without a defined risk question.
What does completion mean?
Completing EDD means the institution has gathered enough information to make and document its decision under its own controls. It does not guarantee that future activity will match the profile. Ongoing monitoring and event-driven review remain necessary when circumstances change.
