Category: Compliance & AML · Reviewed by Amy Price, Account Executive · Last reviewed June 2026
The strengthened CDD measure required under MLR 2017 for higher-risk customers and transactions — including PEPs, high-risk third country links, unusual or complex transactions, and any case where the firm’s risk assessment indicates increased risk.
Enhanced Due Diligence (EDD) is the heightened version of CDD required where higher money laundering or terrorist financing risk is identified. It applies in defined statutory situations and wherever the firm’s risk-based assessment requires it. EDD requires additional information about the customer, the beneficial owner, the source of funds and source of wealth, and increased ongoing monitoring.
MLR 2017, regulations 33–35 (enhanced customer due diligence). JMLSG Guidance Part I, chapter 5.5 provides operational guidance.
EDD applies (a) where there is a high risk of money laundering or terrorist financing identified by the firm’s risk assessment; (b) where the business relationship or transaction involves a person established in a high-risk third country listed by HM Treasury; (c) in any case involving a Politically Exposed Person, family member or close associate; (d) where there is an unusual or complex transaction with no apparent economic or lawful purpose; (e) where there is suspicion of money laundering or terrorist financing; (f) where there is correspondent banking with a respondent outside the UK or EEA. EDD measures include obtaining additional information on the customer, the purpose of the relationship, source of funds, source of wealth, the reason for the proposed transaction, senior management approval, and enhanced ongoing monitoring.
For PEPs specifically, MLR 2017 regulation 35 requires senior management approval, source of wealth and source of funds checks, and enhanced ongoing monitoring. Domestic PEPs (UK PEPs) attract a calibrated risk assessment under FCA FG17/6 (and the 2024 PS24/8 amendments to reflect the Financial Services and Markets Act 2023 changes treating domestic PEPs as inherently lower risk than foreign PEPs).
A new commercial customer ultimately owned by a person identified as a foreign PEP would require EDD: senior management approval for the relationship, evidenced source of funds and source of wealth, ongoing monitoring triggers calibrated to the risk, and documented review at least annually.
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), regulations 33–35. JMLSG Guidance Part I, chapter 5. FCA Finalised Guidance FG17/6 (PEPs). FCA Policy Statement PS24/8 (PEPs amendments).
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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