Enhanced due diligence (EDD)
Enhanced due diligence (EDD) is the stricter level of customer due diligence that banks, EMIs and other obliged entities must apply when a client or transaction presents a higher risk of money laundering or terrorist financing. It means collecting more information, verifying it more thoroughly, getting senior management approval in some cases and monitoring the relationship more closely.
When EDD is required
EU law makes EDD mandatory on top of customer due diligence in four situations:- the client is established in, or the transaction involves, a high-risk third country on the European Commission's list
- the client, a beneficial owner, or one of their family members or close associates is a politically exposed person
- the provider runs a cross-border correspondent relationship with an institution outside the EU
- a transaction is complex, unusually large or follows an unusual pattern with no clear economic or lawful purpose
What EDD involves
- more information on the client, its ownership and its ultimate beneficial owners
- evidence of the source of funds and source of wealth, not just a description
- the reasons for planned or past transactions
- senior management approval to open or continue the relationship, required for PEPs and high-risk third countries
- adverse media screening and other independent checks
- more frequent reviews and closer transaction monitoring
CDD vs EDD
| Customer due diligence (CDD) | Enhanced due diligence (EDD) | |
|---|---|---|
| Applies to | Every client | Higher-risk clients and transactions |
| Ownership | Identify and verify beneficial owners | Same, plus the reason for the structure and evidence for each layer |
| Money | Purpose of the relationship and expected activity | Documented source of funds and source of wealth |
| Approval | Standard onboarding sign-off | Senior management approval in mandatory cases |
| Monitoring | Ongoing, at a normal frequency | Enhanced, with more frequent reviews |
How to get through EDD faster
Send a clear ownership chart with percentages for every layer, and a short note on why each entity exists. Back up source of wealth with documents such as audited accounts, sale agreements, dividend records or tax filings.Explain unusual flows before they happen, for example a large one-off payment from a new investor. Complete, documented answers are what shorten an EDD review.What changes under the AMLR
From 10 July 2027, EDD rules move into the EU Anti-Money Laundering Regulation (AMLR). Article 34 sets the general EDD measures, Articles 29 to 31 cover third countries and Articles 42 to 46 cover PEPs. The EU anti-money laundering authority (AMLA) will issue guidance to make EDD more consistent across member states.FAQ
No. EDD reflects the risk of a profile or structure, not a finding of wrongdoing.
Yes. If the provider can't get enough information to manage the risk, it must decline or end the relationship. See debanking.
Higher-risk clients are reviewed more often than standard ones, often once a year, and again when something material changes.
Related terms and sources
Customer due diligence (CDD) · Politically exposed person · High-risk third country · Jurisdiction risk · Source of funds · Adverse media screening · Browse the full glossary
Last reviewed October 23, 2026Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
What We Offer
IBAN Accounts For Your Business
Support & Compliance
Narvi Knowledge Center
Alternative Investment Funds [whitepaper]Family Offices [whitepaper]Shipping Industry [whitepaper]How to Open a Business Account in FinlandNarvi vs. Wise, Revolut, N26, and other alternativesNarvi vs. Stable.comNarvi vs. payabl.Narvi vs. ConnectPayNarvi vs. IBAN4UNarvi vs. GenomePayments BlogPayments Glossary
Narvi Payments Oy Ab is an Authorized Electronic Money Institution (EMI). Narvi’s EMI license is granted by the Finnish Financial Supervisory Authority (FIN FSA) with the registration number 3190214-6. Narvi’s license is passportised to all European Union countries.
Built and regulated in Finland© 2026 Narvi. All Rights Reserved.
v1.325.0