Enhanced due diligence — when EDD is mandatory
Enhanced due diligence is not “more of the same, but harder” — it is a defined set of triggers with a defined consequence. Article 34 of Regulation (EU) 2024/1624 sets the scope, and it does two separate things: it lists the situations in which EDD is mandatory, and it imposes a standing examination duty on four kinds of transaction regardless of the customer’s risk rating. Firms that treat EDD purely as an output of their scoring model miss the second one.
1. Where EDD is mandatory
Article 34(1) requires enhanced measures in the cases referred to in Articles 29, 30, 31 and 36 to 46, and in any other higher-risk case the firm itself identifies under Article 20(2). Those cross-references are the map:
| Anchor | Situation |
|---|---|
| Articles 29–31 | Third countries identified as having strategic deficiencies, compliance weaknesses, or as posing a specific and serious threat to the Union’s financial system |
| Articles 36–39 | Cross-border correspondent relationships, including for crypto-asset services; individual third-country respondent institutions; and the prohibition on relationships with shell institutions |
| Article 40 | Transactions with a self-hosted address |
| Article 41 | Applicants for residence-by-investment schemes |
| Articles 42–46 | Politically exposed persons, their family members and close associates |
| Article 20(2) | Higher-risk cases the obliged entity identifies itself |
2. The four transaction triggers
Article 34(2) is the provision most often absent from an operating model. It requires firms to examine the origin and destination of the funds involved, and the purpose, of all transactions meeting at least one of four conditions:
- the transaction is of a complex nature;
- the transaction is unusually large;
- the transaction is conducted in an unusual pattern;
- the transaction has no apparent economic or lawful purpose.
3. What feeds the assessment
Article 34(3) requires firms, when assessing the risk of a relationship or occasional transaction, to take into account at least the higher-risk factors in Annex III, the guidelines AMLA adopts under Article 32, and other higher-risk indicators such as notifications issued by the FIU. “At least” is doing real work: Annex III is a floor, and a model that stops at it has not met the article.
This is the practical difference between EDD and a high risk score. A score is an internal artefact. EDD is a set of measures the Regulation names, triggered by situations the Regulation names, evidenced per case.
FAQ
Is EDD the same as a high risk rating?
No. A high rating is one route into EDD, via Article 20(2). The others are the mandatory cases in Articles 29–31 and 36–46 and the four transaction conditions in Article 34(2), none of which depend on the customer’s score.
Does EDD apply to one-off transactions?
Yes. Article 34 covers occasional transactions as well as business relationships, and the Article 34(2) examination duty is framed around transactions specifically.
Is Annex III the complete list of higher-risk factors?
No — it is a minimum. Article 34(3) requires firms to take into account at least those factors, plus AMLA guidelines and other indicators including FIU notifications.
Related: Politically exposed persons · Source of funds vs source of wealth · Ongoing monitoring
