Enhanced Due Diligence (EDD)
An elevated set of due-diligence measures applied when the customer, jurisdiction or transaction is assessed as high-risk under the risk-based approach.
Also known asEnhanced CDD
Definition
Enhanced Due Diligence (EDD) is the deeper level of scrutiny applied to customers, relationships or transactions presenting a higher risk of money laundering or terrorist financing. EDD is mandatory in defined scenarios and otherwise triggered by the institution's own risk-based methodology.
When EDD is mandatory
- The customer is a Politically Exposed Person, a family member or close associate of a PEP.
- The customer or transaction involves a high-risk third country listed by the EU Commission or FATF.
- The relationship involves complex or unusually large transactions with no apparent economic purpose.
- Correspondent banking with a non-EU institution.
- Private banking, real-estate transactions above thresholds, and certain crypto exposures.
Additional EDD measures
- Obtain additional identification and beneficial-ownership information.
- Conduct independent screening against extended lists, including adverse media.
- Establish source of funds and source of wealth, with documentary evidence.
- Obtain senior management approval before entering or continuing the relationship.
- Apply enhanced ongoing monitoring with tighter alert thresholds.
Regulatory anchor
AMLD4 Articles 18–24 in the EU, FATF Recommendation 12 (PEPs) and 19 (high-risk countries). The FCA SYSC 6.3 in the UK, BaFin AuA in Germany, and the ACPR AML guidance in France all expand on EDD expectations.