When Is Enhanced Due Diligence (EDD) Required under MLR 2017?

Enhanced Due Diligence (EDD) is a more stringent version of Customer Due Diligence (CDD), which is applied in situations that present a higher Money Laundering, Terrorist and Proliferation Financing (MLTPF) risk. For example, it is applicable when customers have been assessed as high-risk for MLTPF during the Customer Risk Assessment (CRA) process. Apart from this general obligation, conducting EDD for certain categories of customers is mandatory for Relevant Persons under Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. This infographic answers the question: when is Enhanced Due Diligence required?

Enhanced Due Diligence (EDD) should be conducted in the following situations:

In Cases Where There Is High Risk of MLTPF: Whenever there are cases where the Relevant Person’s Risk Assessment or Supervisory Authorities Sectoral Risk Assessment and other information indicate a high MLTPF risk, EDD should be conducted
When Business Relationships or Transactions Involve High-Risk Third Country: EDD should be conducted while establishing a business relationship with a person from a high-risk third country. EDD should also be conducted whenever the Relevant Person undertakes transactions that are subject to CDD measures, and either of the parties to the transactions is established in high-risk third countries. High-risk third countries are those jurisdictions that have been Grey Listed or Blacklisted by the Financial Action Task Force (FATF). To know more about the FATF Grey and the changes made to it in February 2025, please refer to our Update.
In Relation to Correspondent Relationships: EDD measures must be applied when a credit institution or a financial institution enters into a correspondent relationship with another such institution from a third country for the execution of payments.
For Customers that are PEPs: EDD must be conducted whenever a customer or a potential customer is a Politically Exposed Person (PEP) a family member of a PEP, or a known close associate of a PEP. A PEP is a person who has been entrusted with prominent public functions and who is not a middle-ranking or junior official.
When the Customer has Provided False or Stolen Identification Documents: EDD must be conducted in cases where a customer submits false or stolen identification documents or information, and the Relevant Person seeks to continue to engage with the customer
In Cases of Unusual Transactions: EDD must be conducted for unusual transactions such as:
- Complex or unusually large transactions
- Transactions that have unusual patterns
- Transactions that do not have any apparent economic or legal purpose
Cases that are High-Risk for MLTPF by Nature: EDD should be conducted in cases which inherently pose a higher risk of MLTPF

When is Enhanced Due Diligence (EDD) Required: Final Thoughts

To ensure effective maintenance and management of records while meeting all their AML/CTF/CPF obligations regarding record-keeping, Relevant Persons should ensure that they make and implement Record Keeping policies and procedures as part of its AML/CTF/CPF Program. Further, record management tools such as software solutions can enhance Relevant Person’s Record Keeping efforts.