What enhanced due diligence must a TCSP apply to high-risk clients?
When a trust or company service provider identifies a higher-risk client, it must apply enhanced due diligence (EDD) rather than standard checks. EDD means gathering more information and applying closer scrutiny before and during the relationship. Typical measures include obtaining additional identification and ownership documents, establishing the source of funds and source of wealth, understanding the reason for the structure or transaction, and obtaining senior management approval to take on or continue the client.
Higher risk commonly arises with politically exposed persons and their associates, clients connected to high-risk jurisdictions, complex or opaque ownership structures, and nominee arrangements without a clear commercial rationale. For these relationships the provider should also increase the frequency and depth of ongoing monitoring. If the enhanced checks do not resolve the concern, the provider should decline the business or file a suspicious transaction report as appropriate.
Legal Reference (UAE):
· Federal Decree-Law No. 10 of 2025, Article 19(1)(b) - requires CDD scope to reflect risk, which mandates enhanced measures for higher-risk cases.
· Cabinet Resolution No. 134 of 2025 (Executive Regulations) - specifies enhanced due diligence measures for high-risk clients and PEPs.
For more details, consult the full text of Federal Decree-Law No. 10 of 2025 or seek guidance from your AML compliance officer.