What is enhanced due diligence (EDD)?
Enhanced due diligence (EDD) is the intensified set of measures applied when a client, product, channel or country presents higher money-laundering risk. It typically adds deeper source-of-funds and source-of-wealth verification, adverse-media and open-source research, senior management approval, and more frequent ongoing monitoring.
Written by Andréas Hobbelin · Last updated
What triggers EDD
- Politically exposed persons, their family members and close associates.
- Clients or funds connected to high-risk third countries.
- Complex or opaque ownership structures with no clear commercial rationale.
- Unusually high transaction value relative to the client's profile.
- Adverse media, criminal allegations or unresolved screening concerns.
- Cash-intensive or unexplained funding routes, and third-party payers.
- Non-face-to-face onboarding combined with other risk factors.
What EDD actually adds
EDD is not simply 'more documents'. The additional measures should be targeted at the specific risk identified: corroborating source of wealth as well as source of funds, mapping the full ownership chain to natural persons, conducting structured open-source and adverse-media research, obtaining senior approval before proceeding, and setting a shorter review cycle for the relationship.
Documenting the decision
The value of EDD to a supervisor lies in the written rationale: what risk was identified, what additional evidence was obtained, what it showed, who approved the relationship, and when it will next be reviewed. An EDD file without a recorded decision is an incomplete file.
Frequently asked questions
Does EDD mean the client must be rejected?
No. EDD means the risk must be understood, mitigated and approved at the appropriate level — or declined if it cannot be explained.
Is a high purchase price alone enough to trigger EDD?
Value alone is not decisive; value out of line with the client's known profile is a strong indicator and normally warrants enhanced measures.
Sources and further reading
Related
Put this into practice
PropComply structures KYC/CDD once per client and shares it securely with the parties in the transaction — each keeping their own independent decision.
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