Enhanced Due Diligence (EDD) is a set of compliance measures that are performed in addition to Customer Due Diligence.
During the Customer Risk Assessment (CRA) process, if a customer is assessed to be a high-risk customer, additional checks must be applied in the form of EDD, including:
- Establishing the legitimacy of the customer’s income level,
- Determining the source of funds and source of wealth,
- Understanding the purpose of transactions
- Obtaining senior management’s approval before dealing with such high-risk customer
Here’s an informative article on EDD that can help you understand the concept better: