Enhanced due diligence (EDD) is a more thorough and in-depth version of the due diligence process. It is typically conducted in situations where there is a higher risk of money laundering, financial crimes, or other types of illicit activity.
In the world of money services businesses (MSBs), EDD may be required for certain customers or transactions that are considered higher risk. This could include transactions with high amounts of money, transactions with individuals or entities from high-risk countries, or transactions that involve complex or unusual structures.
The specific steps involved in conducting EDD will vary depending on the MSB and the regulations they are subject to. However, in general, the process may involve the following:
- Gathering and reviewing a greater amount of documentation and information about the customer and the transaction.
- Conducting more extensive background checks on the customer and any related parties.
- Assessing the customer’s risk level and determining whether additional controls or measures are necessary to mitigate potential risks.
- Documenting the results of the EDD process and keeping records for future reference.
Overall, the goal of EDD is to ensure that a MSB has a complete and accurate understanding of the customer and the transaction, and that any potential risks have been identified and addressed.
This page was last updated on January 5, 2023.