Enhanced due diligence
EDD
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Additional measures where the money-laundering risk is higher, for example for PEPs, high-risk countries or unusually complex structures.
They include in-depth enquiries into the origin of assets, approval by senior management and closer monitoring.
In practice
In practice, enhanced due diligence is documented in a short, reasoned note: why the relationship carries a higher risk, which additional information was obtained, how the source of wealth and source of funds were made plausible and who approved the relationship. The review cycle is shorter, and screening hits and unusual transactions are examined with particular care.
Distinctions and common mistakes
Enhanced due diligence does not mean collecting more documents without analysis. A common mistake is a thick file without a conclusion: reviewers expect a clear assessment of whether the information explains the wealth and the transactions.
Relevant in: Switzerland · Germany · Austria · Liechtenstein · EU-wide
Related terms
- Politically exposed person
- A person who holds or has held a prominent public function, as well as their family members and persons known to be close associates.
- High-risk country
- A country with strategic deficiencies in combating money laundering and terrorist financing, in particular according to the FATF lists.
- Source of wealth
- How a person's total wealth came about, for example through entrepreneurship, inheritance or employment.
Mentioned in these guides
- The risk-based approach in a family officeHow the risk-based approach under Swiss, German and Austrian AML law and the FATF works: risk factors, risk classes, graduated due diligence and documentation.
- Enhanced due diligence in practiceWhen enhanced due diligence applies and what to do in practice: PEPs, high-risk countries, complex structures, senior management approval, source of wealth.
- The KYC process in a family office: from onboarding to periodic reviewThe full KYC process in a family office: pre-screening, identification, risk rating, approval, ongoing monitoring, event reviews, periodic review and exit.
- PEPs: family members and close associatesWho counts as a family member or close associate of a politically exposed person, how long the status lasts and what it means for due diligence.