EDD (Enhanced Due Diligence)
An elevated level of scrutiny and investigation applied to high-risk customers, such as PEPs, or to transactions involving high-risk jurisdictions or products.
EDD is not one fixed checklist — it is customer due diligence scaled up to match a specific, identified risk. For a PEP match, that typically means senior management approval before establishing or continuing the relationship, reasonable measures to establish source of wealth and source of funds, and enhanced ongoing monitoring. For a high-risk-jurisdiction customer, it might mean additional identity verification or transaction-purpose documentation instead. The common thread is proportionality: EDD is triggered by a specific risk factor and scoped to address that factor, not applied as an undifferentiated extra layer on every file.
The regulatory direction as of 2025-2026 explicitly pushes against over-application. FATF revised Recommendation 1 and its Interpretive Note in February 2025 to strengthen proportionality, and blanket EDD (or blanket refusal) applied to an entire customer category rather than to an assessed risk is now the behaviour standard-setters are actively discouraging — it is a form of de-risking, not a safer posture.