What is enhanced due diligence (EDD)?

When enhanced due diligence applies

The EU's Directive (EU) 2015/849 and the UK's Money Laundering Regulations 2017 name the cases, and add any other case that a firm's own risk assessment rates as high.

• EU: relationships or transactions involving a high-risk third country identified by the European Commission (Article 18a).
• UK: a customer, or a party to the transaction, established in a country on the FATF's call for action list (regulation 33).
• Politically exposed persons, their family members and known close associates.
• EU: cross-border correspondent relationships with institutions outside the EU (Article 19).
• Transactions that are complex, unusually large, in an unusual pattern or without an apparent economic or lawful purpose.

What enhanced due diligence adds

For high-risk third countries the EU directive lists the measures, and the UK regulations list the same ones for call for action countries:

• More information on the customer and the beneficial owner
• More information on the intended nature of the relationship
• The source of funds and the source of wealth
• The reasons for the transactions
• Senior management approval to start or continue the relationship
• Closer monitoring: more controls, more often

Why enhanced due diligence matters to a product

EDD is manual work: an analyst asks for documents, reads them and writes up a decision that a senior manager signs. A product therefore decides early which customers it will take through that process and which it will not serve.

For crypto businesses, the directive has the European Banking Authority's guidelines include procedures to detect the origin or destination of crypto-assets where risk is higher (Article 18). From 10 July 2027, the EU's AML Regulation has firms update the information on higher-risk customers at least once a year (Article 26).

EDD, CDD or simplified due diligence?

Customer due diligence

The standard measures, applied to every customer. EDD is added to them, never used in their place.

Simplified due diligence

Lighter measures, allowed where the risk is shown to be low. EDD is the other end of the same scale.

Source of funds and source of wealth

Source of funds is where the money in a transaction came from. Source of wealth is how the person built up their assets as a whole, and EDD asks for both.

Where Enhanced due diligence shows up in a platform

Modules that do the work

• KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
• Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
• BackofficeOne console to run the platform: customers, money, risk, content and staff permissions.

Platforms that need it

• Banking app
• Crypto exchange
• Business account
• Crypto OTC desk

Guides that go deeper

• FCA cryptoasset registration: what UK crypto firms needWhat FCA registration under the Money Laundering Regulations asks of a UK crypto business, how crypto promotions are controlled, and what changes on 25 October 2027.

Where it is written

The laws and standards this page's facts come from.

• Directive (EU) 2015/849, the Anti-Money Laundering Directive, consolidated (EUR-Lex) ↗
• Money Laundering Regulations 2017 (legislation.gov.uk) ↗
• Regulation (EU) 2024/1624, the AML Regulation (EUR-Lex) ↗

General information, not legal advice: what applies to you depends on your services and your market.