Enhanced Due Diligence
Enhanced Due Diligence is a more thorough level of client verification required when a relationship presents a higher risk of money laundering or terrorist financing. EDD steps typically include verifying the source of funds, establishing source of wealth, obtaining senior management approval before onboarding, and applying more frequent ongoing monitoring.
EDD is triggered by factors such as a client being a Politically Exposed Person, operating from a high-risk country, having a complex ownership structure, or involving unusually large or unexplained transactions.
How different roles use Enhanced Due Diligence
A good definition should change the next action for the person reading it.
Partner or director
Check whether this term affects acceptance risk, fee scope, supervision exposure, or sign-off responsibility.
ContinueMLRO or compliance lead
Map the term to evidence, escalation, monitoring, training, and inspection readiness.
ContinueClient-facing team member
Use the plain-English explanation to ask better client questions and write clearer file notes.
ContinueOther terms that go with Enhanced Due Diligence
A Politically Exposed Person is an individual who holds or has held a prominent public function — such as a head of state, senior government minister, senior civil servant, judge, military officer, or senior executive of a state-owned enterprise — and their close family members and known associates. PEPs carry elevated money laundering risk due to their access to public funds or political influence. Since the Financial Services and Markets Act 2023 (s.78) and the FCA's PS24/4 guidance, UK domestic PEPs are by default treated as lower risk than foreign PEPs unless other risk factors apply.
Source of funds refers to the origin of the specific money or assets used in a particular transaction or to fund a business relationship — for example, the proceeds of a property sale, a business loan, or salary income. Establishing source of funds is a key EDD step where a transaction is large, unusual, or involves a higher-risk client.
Source of wealth refers to the origin of a client's total net worth or assets — for example, built through a business, inheritance, investments, or professional career. Source of wealth is a broader concept than source of funds and is typically assessed for PEPs and other higher-risk clients as part of Enhanced Due Diligence.
Customer Due Diligence is the core legal obligation under MLR 2017 to identify clients, verify their identity using reliable independent sources, and understand the purpose and intended nature of the business relationship. Standard CDD applies to most clients. Where risk is elevated, Enhanced Due Diligence (EDD) is required instead.
Before you treat Enhanced Due Diligence as handled
- Confirm which regulation, policy, or internal procedure the term maps to.
- Document the decision or evidence trail in the client file, not only in email or chat.
- Escalate where the term indicates higher risk, sanctions exposure, PEP status, suspicion, or missing evidence.
- Keep the wording consistent across onboarding, review notes, training material, and inspection packs.
Put Enhanced Due Diligence into practice with Certivus
Knowing the term is the first step. Certivus gives you the workflows — client intake, CDD, EDD, PEP and sanctions screening, audit-ready records — to apply it across every client.
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