Enhanced due diligence (EDD)

In short

Enhanced due diligence (EDD) is a more in-depth customer due diligence that a business covered by the Money Laundering Regulations 2017 must carry out (regulation 33) when the risk of money laundering is higher.

Paucitas is an independent expert firm in the Netherlands that investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.

What does this mean if you hold crypto?

For example with politically exposed persons, a relationship with a high-risk country or unusually large or complex transactions. The institution then asks for more and stricter substantiation, especially about the origin of money and assets.

If you face enhanced due diligence, the institution asks not only about one transaction, but about how your assets came about as a whole. With crypto, that often means a full reconstruction: when was it bought, with what money, through which wallets and exchanges, and how did the value grow.

Practical example

Someone wants to deposit a large amount from crypto with a private bank. Because it is a high amount and an unusual source, the bank starts an enhanced due diligence review. An independent report showing the whole route from the original investment to the sale gives the bank the substantiation it needs.

More about enhanced due diligence (EDD)

What is enhanced due diligence?

Enhanced due diligence (EDD) is a stricter customer due diligence that a business covered by the Money Laundering Regulations 2017 must carry out when the risk of money laundering is higher. The institution then asks for more substantiation about who the client is and where the money and assets come from.

When is enhanced due diligence mandatory?

Enhanced due diligence is mandatory in situations with a higher risk, such as politically exposed persons, relationships with countries designated as high risk and unusually large or complex transactions. The institution decides per client whether the risk is higher.

What is the difference between source of funds and source of wealth?

Source of funds is about the origin of the money in a specific transaction. Source of wealth is about how the client’s total assets came about. In enhanced due diligence, an institution often asks about both.

How does Paucitas support enhanced due diligence?

Paucitas reconstructs the origin of crypto assets from the first purchase to the sale and links each step to the blockchain and to your documents. The report is structured so that anyone can check and understand each step.

SourceThe legal basis for customer due diligence in the United Kingdom: The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

Would you like to know what this means for your own situation? Paucitas will look at it with you, free of obligation: ring us on +31 20 244 5774, day or night, or get in touch.

Your own situation

If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.

The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.

Go to the contact form