What is the difference between Standard Due Diligence and Enhanced Due Diligence?

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What is the difference between Standard Due Diligence and Enhanced Due Diligence?

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Enhanced Due Diligence (EDD) is an extension of the Standard Due Diligence. The key difference between them is the amplitude of due diligence measures based on the customer’s risk profile. Regulated Entities conduct Standard Due Diligence when dealing with a low or medium-risk customer. EDD is conducted when dealing with a high-risk customer.

EDD involves:

  • A deep dive into the customer’s background for the purpose of detecting red flags suggesting Money Laundering, Terrorism Financing, or Proliferation Financing (ML/TF/PF) risks
  • Additional inquiry and review of the customer
  • Determining the purpose of establishing the business relationship
  • Assessing the financial profile of the customer

The above-mentioned elements are either absent in a Standard Due Diligence or conducted at a lower scale.

Dive into the differences between Enhanced Due Diligence and Standard Due Diligence with this detailed blog: