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Enhanced Due Diligence (EDD)

Overview

Enhanced Due Diligence is a deeper investigation applied to higher-risk customers, transactions, or relationships beyond standard CDD. It expands identity proofing, verifies source of funds/wealth, maps ownership/control (including UBOs), and assesses geographic, product, and channel risks. EDD typically adds adverse media reviews, onsite/virtual interviews, tighter limits, senior-level approvals, and more frequent monitoring.

Triggers include PEP status, complex structures, high-risk jurisdictions, negative news, unusual activity, or crypto exposure. Good EDD is documented, repeatable, and proportional capturing evidence, decisions, and periodic review dates. It should integrate with risk scoring, transaction monitoring scenarios, and case management for auditability. While rigorous, EDD must balance thoroughness with customer experience by using orchestration, coached capture, and clear requests. Effective EDD reduces residual risk, deters misuse of the institution, and demonstrates a credible risk-based approach to regulators and partners.

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Related Terms

Customer Due Diligence (CDD)

PEP Screening

Risk Based Approach (RBA)

FAQ

When do we apply EDD?

When risk exceeds policy thresholds PEPs, complex ownership, high-risk geographies, unusual activity, or negative media. Triggers should be codified so reviewers act consistently and can justify decisions to auditors.

What evidence is typical?

Documented source of funds/wealth, corporate filings, beneficial ownership attestations, adverse media outcomes, and reference checks. Capture artifacts, dates, and analyst notes to support the EDD narrative.

How often is EDD refreshed?

More frequently than standard KYC: commonly 6–12 months for high risk, sooner if material changes occur (role, geography, products). Scheduling should align to customer risk rating.

How does EDD affect onboarding?

It can add steps and time. Use orchestration to parallelize checks, set expectations with customers, and escalate only what can materially change the risk decision.