Glossary
EDD (enhanced due diligence)
EDD is the deeper set of checks applied to higher-risk customers, such as PEPs, to understand the source of their wealth and funds.
EDD (enhanced due diligence) explained
Enhanced due diligence adds measures on top of standard customer due diligence when the risk is higher. Typical triggers are politically exposed persons, customers from higher-risk jurisdictions, complex ownership structures, cash-intensive businesses and relationships where the purpose is unclear.
The enhanced measures usually include establishing the source of wealth and the source of funds, obtaining senior management approval to open or continue the relationship, more frequent reviews, and closer monitoring of transactions.
For example, before opening an account for a company owned through two offshore holding companies, an institution would trace the ownership chain to the individuals at the top and record how the business was funded.
Why it matters in life insurance
Regulators in Zambia expect institutions to show not only that a customer was rated high-risk but that the enhanced measures were actually carried out and approved. A spreadsheet rarely holds that evidence in one place. ERMAML, the Ontech Risk & Compliance Suite, runs EDD as a workflow with a form, an evidence vault and a named reviewer, so approval and follow-up reviews are recorded on the customer.
Related terms
CDD (customer due diligence) · PEP (politically exposed person) · Beneficial ownership