Enhanced due diligence (EDD)
Enhanced due diligence (EDD) refers to the due diligence process that a business applies to an individual deemed to carry a potentially high risk of money laundering. It typically includes some combination of more stringent identity verification, additional AML screenings, source of funds (SoF) verification, and heightened transaction monitoring compared to the standard customer due diligence (CDD) process.
Frequently asked questions
What is the difference between SDD, CDD, and EDD?
There are three main levels of due diligence.
Customer due diligence (CDD) is considered to be the standard level of due diligence, which is applied to customers or transactions that present the standard level of money laundering risk.
Simplified due diligence (SDD) is a more streamlined level of due diligence that is reserved for customers and transactions that have been deemed to carry a low level of money laundering risk.
Enhanced due diligence (EDD) is on the opposite end of the spectrum from SDD, representing the due diligence protocol applied to the riskiest of customers and transactions.
What are examples of enhanced due diligence?
Enhanced due diligence will look different for every organization. Examples include:
- Requiring multiple forms of identity verification (ex: gov ID verification, database verification, selfie verification) instead of one
- Performing additional AML screenings (ex: adverse media checks, email risk check, phone risk check)
- Requiring manual review for final approval of an account