Enhanced due diligence
EDDAlso called enhanced customer due diligence
Enhanced due diligence is the extra layer of checks a regulated firm applies when a customer or transaction carries higher money laundering risk. It goes beyond standard customer due diligence. It usually means verifying source of funds and wealth, getting senior management approval and monitoring the relationship more closely.
How it works
EDD starts when a risk trigger appears. Common triggers are a politically exposed person, a link to a country on the FATF call for action list, an unusually complex or unusually large transaction, or a high customer risk rating. The analyst gathers evidence on source of wealth and funds, documents the findings and seeks senior approval before the relationship continues.
EDD focuses scarce analyst time on the riskiest relationships. Since 30 June 2026 the UK trigger for high-risk third countries covers only FATF call for action jurisdictions, not the grey list. Regulators regularly find EDD files with thin source of wealth evidence and approvals that were never documented.
The rules
Requires EDD for high-risk situations, PEPs, unusually complex or unusually large transactions and FATF call for action countries.
UK relevant personsSets harmonised enhanced due diligence measures for higher-risk situations, high-risk third countries and politically exposed persons across the EU.
EU obliged entitiesRequire enhanced measures for politically exposed persons and for relationships with countries FATF calls on members to treat as higher risk.
Financial institutions in FATF member jurisdictionsCommon questions
What triggers enhanced due diligence?
Typical triggers are politically exposed persons, correspondent banking relationships, customers linked to high-risk third countries, unusually complex or large transactions, and any situation the firm's risk assessment rates as high risk.
What did the UK change about EDD in 2026?
From 30 June 2026 the mandatory high-risk third country trigger applies only to countries on the FATF call for action list. Grey list links are handled through the firm's wider risk assessment.
Is source of wealth always required in EDD?
EDD measures depend on the risk. For PEPs, UK and EU rules require measures to establish source of wealth and source of funds. For other high-risk cases firms choose measures proportionate to the risk identified.
