How it works

EDD is triggered when risk factors push a customer or transaction above the institution's standard risk tolerance. Common triggers include politically exposed persons, links to high-risk jurisdictions, complex ownership structures, unusually large or complex transactions, and correspondent relationships. Measures usually include obtaining and corroborating source-of-funds and source-of-wealth information, understanding the rationale for unusual transactions, obtaining senior management sign-off, and tightening monitoring thresholds.

Requirements by jurisdiction

• US: Specific EDD obligations apply to certain foreign correspondent accounts (31 CFR 1010.610) and private banking accounts for non-US persons, including enhanced scrutiny of senior foreign political figures (31 CFR 1010.620). Beyond these, the CDD Rule expects due diligence to be commensurate with the customer's risk profile.

• EU: AMLR Article 34 sets out general EDD measures, with specific rules for high-risk third countries, PEPs and cross-border correspondent relationships, applicable from 10 July 2027. It also names personalized asset management for customers holding at least €50 million in assets as a higher-risk case.

• UK: Regulation 33 of the Money Laundering Regulations 2017 lists EDD triggers. From 30 June 2026, SI 2026/621 narrowed the transaction trigger to transactions that are "unusually complex or unusually large" given their nature, and replaced "high-risk third country" with "FATF call for action country" in the geographic trigger.

Common challenges

EDD is labor-intensive and often inconsistent across analysts. Source-of-wealth evidence is hard to corroborate, and firms risk over-applying EDD to entire customer categories rather than assessing individual risk, a practice regulators have criticized, for example in the UK's review of PEP treatment.

How teams handle it in practice

Teams define clear EDD triggers in their risk methodology, use structured questionnaires and evidence checklists, and require documented approval by a senior manager. Reviews are scheduled more frequently, and monitoring rules are tuned more tightly for EDD customers. Compliance platforms like Corsa can assemble EDD evidence packs and route them for approval.