Enhanced Due Diligence (EDD) is an advanced level of customer verification and risk assessment applied to high-risk customers, transactions, or relationships requiring additional scrutiny beyond standard due diligence.
Key Components
- Detailed verification
- Risk assessment
- Background checks
- Transaction monitoring
- Documentation review
Trigger Factors
- High-risk customers
- Large transactions
- Suspicious patterns
- Geographic risks
- Complex structures
Investigation Areas
- Source of funds
- Business purpose
- Ownership structure
- Transaction patterns
- Risk exposure
Documentation
- Identity verification
- Financial records
- Business documents
- Transaction history
- Risk assessments
Best Practices
- Regular updates
- Detailed records
- Risk monitoring
- Compliance checks
- Staff training
EDD is crucial for managing high-risk relationships and ensuring regulatory compliance.