Enhanced Due Diligence Triggers

Enhanced Due Diligence (EDD) triggers are specific events or thresholds that necessitate a deeper investigation into a customer's profile and transaction history. Unlike standard due diligence, EDD is reserved for high-risk clients or complex transactions that pose a greater potential for money laundering or fraud.

Triggers can include the identification of a Politically Exposed Person, transactions involving high-risk jurisdictions, or the sudden receipt of large, unexplained sums of capital. In the crypto domain, triggers might also include interactions with high-risk protocols or the use of anonymity-enhancing technologies.

When a trigger is activated, the institution must collect additional information, verify the source of wealth, and document the rationale for continuing the business relationship. This process is critical for managing institutional risk and meeting the high standards set by regulatory authorities.

EDD ensures that the institution is not inadvertently facilitating illicit activities by high-risk actors.