What is Enhanced Due Diligence? A Complete 2026 Guide

Enhanced Due Diligence (EDD) is the deepest tier of customer and counterparty verification under EU anti-money-laundering (AML) law. Where standard Customer Due Diligence (CDD) confirms who a client is, EDD asks the harder questions: where their money actually comes from, who ultimately controls them, what jurisdictions they touch, and whether any of that creates unacceptable risk for the institution onboarding them.

When is Enhanced Due Diligence required?

Under the EU AML Directives and the Czech AML Act (Act No. 253/2008 Coll.), EDD is mandatory whenever any of the following is present:

• The client or their ultimate beneficial owner is a politically exposed person (PEP), a family member, or a close associate.
• The transaction or counterparty is linked to a high-risk third country on the EU or FATF list.
• The relationship is non-face-to-face and cannot be verified through a qualified electronic identification scheme.
• The transaction is unusually large, complex, or has no obvious economic purpose.
• The institution's own risk assessment flags the relationship as higher risk (sector, ownership structure, geography, product).

EDD vs CDD vs SDD

The three tiers form a risk-based ladder:

• Simplified Due Diligence (SDD) – low-risk clients (listed companies, regulated entities). Identity verification is enough.
• Customer Due Diligence (CDD) – the standard tier. Identify the client, verify identity from independent sources, identify the UBO, understand the purpose of the relationship.
• Enhanced Due Diligence (EDD) – everything in CDD plus source-of-funds and source-of-wealth verification, deeper UBO mapping, adverse-media and sanctions screening, and senior-management sign-off before onboarding.

Enhanced Due Diligence checklist

A defensible EDD file typically contains:

1. Full corporate ownership chart up to the ultimate beneficial owner, with documentary support for each layer.
2. Independent verification of UBO identity (passport or national ID + proof of address less than three months old).
3. PEP, sanctions, and adverse-media screening against a recognised database, with screenshots dated and signed.
4. Source-of-funds evidence for the specific transaction (bank statements, contracts, audited accounts).
5. Source-of-wealth evidence for the UBO (employment history, business sales, inheritance documents).
6. Jurisdictional risk assessment for every country in the ownership chain and the flow of funds.
7. Site visit or video-verified meeting where the client is non-face-to-face.
8. Senior-officer approval recorded in writing before the relationship goes live.
9. Enhanced ongoing monitoring schedule, with a documented review cadence (typically every 6 to 12 months).

How Exero Group runs EDD across the EU

From our Prague office we run EDD on counterparties, investment targets and high-risk clients across the European Union. A typical engagement combines registry research in every relevant jurisdiction, multilingual adverse-media review (EN, CS, DE, RU, UA, PL), sanctions and PEP screening, discreet human-source enquiries where permitted, and a written report formatted to satisfy bank or auditor review. Turnaround is normally 5 to 10 working days; expedited 48-hour EDD is available for time-sensitive transactions.

Common EDD mistakes that fail audit

The three failures we see most often when reviewing other firms' files: (1) UBO identified on paper but never independently verified, (2) source-of-funds documented for the entity but not for the specific transaction, (3) screening run once at onboarding and never refreshed. Any one of them is enough to make the file indefensible if the regulator asks.

If you need EDD on a specific counterparty, contact Exero Group for a scoped quote and timeline.

Need investigative support on a similar matter?

Talk to a senior Exero Group investigator in confidence.

Assign a Case