Enhanced Due Diligence (EDD)

Enhanced Due Diligence is a higher level of scrutiny applied to customers who are identified as posing a higher risk of money laundering or terrorist financing. This includes Politically Exposed Persons, individuals from high-risk jurisdictions, or those involved in unusually large or complex transactions.

EDD requires more extensive information gathering, such as verifying the source of wealth and the source of funds. In the crypto derivatives market, EDD might involve deep analysis of a user's trading history and their involvement in decentralized finance protocols.

This deeper investigation helps the institution manage the elevated risk that these customers present. It is a necessary measure to comply with international standards set by bodies like the Financial Action Task Force.

By applying EDD, institutions can better protect themselves from legal and reputational harm. It demonstrates a commitment to high compliance standards, even when dealing with complex or high-net-worth individuals.