Enhanced Due Diligence checklist: Strengthen your KYC process with confidence

In an era where identity fraud and financial crime are rapidly evolving, basic Know Your Customer (KYC) measures are no longer enough. Financial institutions, fintechs, and crypto platforms are required to go beyond surface-level checks with Enhanced Due Diligence (EDD) — a critical pillar of Anti-Money Laundering (AML) compliance and trust-building.

This guide provides an actionable Enhanced Due Diligence Checklist and shows how Veriff helps streamline, scale, and secure your EDD process.

What is Enhanced Due Diligence (EDD)?

Enhanced due diligence process is a deeper level of customer vetting used to identify and monitor high-risk clients or transactions. It builds on standard due diligence by adding layers of verification, monitoring, and risk assessment—especially important for:

• Politically Exposed Persons (PEPs)
• Clients in high-risk jurisdictions
• Crypto or gambling users
• Complex corporate structures
• Unusual transaction patterns

Failing to implement EDD properly can result in regulatory fines, reputational loss, and exposure to serious fraud.

Enhanced due diligence process is a deeper level of customer vetting used to identify and monitor high-risk clients or transactions. It builds on standard due diligence by adding layers of verification, monitoring, and risk assessment—especially important for:

• Politically Exposed Persons (PEPs)
• Clients in high-risk jurisdictions
• Crypto or gambling users
• Complex corporate structures
• Unusual transaction patterns

Failing to implement EDD properly can result in regulatory fines, reputational loss, and exposure to serious fraud.

Benefits of Enhanced Due Diligence

Enhanced Due Diligence (EDD) offers numerous benefits to financial institutions and organizations. Some of the key advantages of EDD include:

EDD helps identify and mitigate risks associated with high-risk customers or transactions, reducing the likelihood of financial crimes and reputational damage. By thoroughly vetting high-risk entities, financial institutions can proactively address potential threats before they escalate.

EDD ensures compliance with anti-money laundering (AML) regulations and financial crime prevention laws, reducing the risk of fines and penalties. Adhering to these stringent requirements demonstrates a commitment to regulatory standards and helps avoid costly legal repercussions.

Enhanced Due Diligence (EDD) provides financial institutions with a deeper and more comprehensive understanding of their customers and their transactions. By analyzing detailed customer data, EDD allows these institutions to make well-informed decisions about their business relationships. This level of transparency not only fosters trust but also enables more precise risk assessments, ensuring that institutions can better evaluate the potential risks associated with their customers and partners.

One of the key benefits of EDD is its ability to help prevent money laundering and terrorist financing, both of which pose significant threats to the financial sector. By identifying unusual or suspicious activities early in the process, EDD reduces the risk of financial losses and safeguards against reputational damage. Institutions can act quickly to address potential threats, protecting their assets and maintaining compliance with stringent regulatory requirements.

In addition to mitigating risks, EDD plays a vital role in building trust with customers. By demonstrating a clear commitment to transparency, security, and compliance, financial institutions can enhance their credibility in the eyes of their clients. This trust is critical for establishing and maintaining long-term business relationships, as well as fostering customer loyalty in an increasingly competitive market. Ultimately, EDD not only ensures regulatory compliance but also supports the growth and integrity of financial institutions by creating a secure and trustworthy environment for their customers.

Your essential enhanced Due Diligence checklist

Here’s what every EDD program should include to mitigate risk and build long-term trust:

A well-defined diligence process is crucial for assessing high-risk customers and ensuring compliance with regulations.

1. Initial risk profiling

• Conduct user risk scoring based on jurisdiction, industry, transaction patterns
• Include device, behavioral, and fraud analytics from the start

2. PEP & Sanctions screening

• Real-time screening against OFAC, UN, HMT, EU, and other global watchlists
• Use tools that continuously monitor changes, not just point-in-time checks

3. Adverse media screening

• Scan 150+ million sources for negative news (fraud, financial crime, political exposure)
• Enable auto-flagging for predicate offenses or media triggers

4. Document and Identity Verification

• Require ID, Proof of Address, and business registration documents
• Validate document authenticity with AI-powered tools and assisted image capture
• Support 12,000+ ID types in 48 languages for global verification

5. Source of funds / Wealth assessment

• Request and verify bank statements, employment records, corporate ownership
• Use network/device analytics to uncover inconsistencies in submitted data

6. Ongoing monitoring and reassessment

• Re-screen high-risk clients periodically
• Implement biometric re-authentication to validate returning users
• Monitor transaction activity for anomalies in real-time

Additionally, implement enhanced due diligence procedures to manage high-risk customers, particularly politically exposed persons (PEPs), by using a risk-based approach to determine the necessary information to collect.

How Veriff supercharges your EDD process

With Veriff, you can turn your enhanced due diligence process into a scalable, reliable compliance engine—powered by automation, biometric intelligence, and real-time risk signals:

Veriff offers comprehensive identity verification and AML screening solutions to help businesses ensure compliance and reduce fraud. With access to a global library of over 12,000 identity documents across 230+ countries, Veriff combines advanced fraud detection, assisted image capture, and passive liveness detection to streamline user onboarding while minimizing friction. Its AML tools screen users against global PEP, sanctions, and adverse media lists, with continuous monitoring to alert businesses of changes instantly. Additionally, Veriff scans over 150 million media sources for adverse media and background checks, building robust customer risk profiles. Customizable onboarding flows with omnichannel support allow businesses to tailor the user experience, adding branding and compliance-specific features as needed.

Customer identification and information

Customer identification and information are critical components of Enhanced Due Diligence (EDD). Financial institutions must gather and verify information about their customers, including:

Identity Verification:

Verifying the customer’s identity through government-issued documents, such as passports or driver’s licenses. This step ensures that the individual is who they claim to be and helps prevent identity fraud.

Address Verification

Verifying the customer’s address through utility bills or other documents. Confirming the address adds another layer of assurance and helps in tracking the customer’s location.

Source of funds

Verifying the source of the customer’s funds to ensure they are legitimate and not derived from illicit activities. This involves reviewing bank statements, employment records, and other financial documents to confirm the origin of the funds.

Ultimate beneficial ownership

Identifying the ultimate beneficial owner of the customer’s assets to prevent money laundering and terrorist financing. Understanding who ultimately controls the assets helps in assessing the true risk associated with the customer.

Transaction monitoring

Monitoring the customer’s transactions to identify suspicious activity and prevent financial crimes. Continuous transaction monitoring allows financial institutions to detect and respond to unusual patterns in real-time.

High-risk entities and Enhanced Due Diligence

High-risk entities, such as Politically Exposed Persons (PEPs) and companies operating in high-risk countries, require Enhanced Due Diligence (EDD) to effectively reduce the risk of financial crimes like money laundering, fraud, and terrorist financing. Financial institutions must take a proactive approach to identify, assess, and mitigate risks associated with these entities. Here are the critical steps involved:

Financial institutions need to perform thorough risk assessments to identify potential risks tied to high-risk entities. This process involves evaluating the entity’s background, including their ownership structure, business activities, and geographical location, to determine their level of risk exposure. High-risk countries, for example, may have weak regulatory frameworks or higher corruption levels, which increases the likelihood of financial crimes. Assessments should also consider the nature of the entity’s transactions and their potential for misuse by bad actors.

Collecting comprehensive data about high-risk entities is essential for building a detailed risk profile. This includes analyzing the entity’s business activities, key relationships, sources of funds, and transaction histories. Financial institutions often need to go beyond standard due diligence by requesting documentation such as corporate records, ownership certificates, and explanations of transaction purposes. This deeper level of scrutiny ensures that no critical details are missed and helps identify potential red flags early on.

Transactions involving high-risk entities must be closely monitored to detect suspicious activity, such as unusual patterns, large sums of money, or transfers to jurisdictions with weak regulations. Continuous monitoring allows institutions to respond quickly to potential threats, flagging transactions that might indicate money laundering or other financial crimes. Advanced analytics and AI tools can assist in identifying patterns and anomalies that would otherwise go unnoticed, ensuring a more robust detection process.

To prevent money laundering and terrorist financing, financial institutions must implement stricter controls for high-risk entities. These include enhanced customer due diligence procedures, ongoing monitoring of accounts, and regular audits. Enhanced controls may also involve requiring additional approvals for high-value transactions or maintaining detailed reporting protocols. By putting these measures in place, institutions can safeguard the integrity of their financial systems and comply with regulatory requirements.

Overall, Enhanced Due Diligence is a vital component of any financial institution’s effort to maintain compliance and reduce exposure to financial crime risks. By adopting these rigorous practices, institutions can protect their reputation, build trust with their customers, and contribute to global efforts to combat illicit financial activities.

Best practices for successful Enhanced Due Diligence

To ensure successful Enhanced Due Diligence (EDD), financial institutions should follow best practices, including:

Implementing a risk-based approach

Implementing a risk-based approach to EDD, focusing on high-risk customers and transactions. This approach allows institutions to allocate resources effectively and prioritize the most significant risks.

Conducting regular risk assessments

Conducting regular risk assessments to identify potential risks and update EDD procedures accordingly. Regular assessments ensure that the institution’s risk management strategies remain current and effective.

Providing ongoing training

Providing ongoing training to employees on EDD procedures and best practices. Continuous education ensures that staff are well-equipped to identify and manage risks effectively.

Using technology

Using technology, such as automated risk assessment tools, to streamline EDD processes and improve efficiency. Advanced technologies can enhance the accuracy and speed of due diligence procedures, reducing the burden on compliance teams.

Maintaining accurate records

Maintaining accurate records of EDD procedures and results to ensure compliance with regulatory requirements. Detailed documentation is essential for demonstrating compliance during audits and regulatory reviews.

Veriff and Easygo/Stake: Streamlining player onboarding

Easygo, a global software development startup, faced challenges in verifying customer age and residency for its subsidiary, Stake.us. Initially, they relied on manual in-house KYC screening, which was labor-intensive and caused significant delays, with some customers waiting over a week for verification. By integrating Veriff's automated identity verification solution, Easygo achieved near-real-time validation, eliminating backlogs and enhancing the customer experience. This implementation also effectively identified and removed fraudulent actors attempting to exploit the system.

This case study demonstrate the versatility and effectiveness of Enhanced Due Diligence, showcasing how Veriff's solutions contribute to compliance, fraud prevention, and improved user experiences.​