The 5 Triggers for Enhanced Due Diligence (Section 32)
When do you stop "standard" checks and perform "deep" checks? Section 32 provides the answer.
The 5 triggers (Section 32)
1. High ML/TF Risk
Customer or transaction assessed as high risk under your risk assessment.
2. Suspicious Matter Report Obligation
Where you have formed or should have formed a suspicion. See how to file an SMR.
3. Foreign PEPs
Politically Exposed Persons from foreign jurisdictions.
4. High-Risk Jurisdictions
Countries on the FATF grey or black list. See high-risk jurisdictions guide.
5. Complex Structures Without Clear Purpose
Unusual corporate arrangements lacking commercial rationale. Check beneficial ownership.
What is EDD?
Enhanced Due Diligence typically involves:
- Source of Wealth verification - where did the money come from historically?
- Source of Funds verification - where is the money for this transaction coming from?
- Senior Management Approval - documented sign-off to proceed
Key Takeaway
Section 32 requires EDD when: high ML/TF risk, SMR obligation, foreign PEPs, high-risk jurisdictions or complex unexplained structures. EDD means verifying source of wealth/funds and obtaining senior management approval.
Read our complete Tranche 2 Guide
Key dates, affected sectors, obligations and how to prepare
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