Enhanced due diligence is a more thorough form of customer due diligence that the Dutch Wwft requires when a customer, relationship or transaction carries a higher risk of money laundering or terrorist financing. Think of politically exposed persons (PEPs), customers linked to high-risk countries and complex or unusually large transactions. You then gather more information, investigate the source of wealth and funds, obtain senior management approval and monitor the relationship more closely.
In Dutch this is called verscherpt cliëntenonderzoek. It is the most demanding of the three levels of customer due diligence. Read What is KYC? to see how the standard investigation works.
When is enhanced due diligence needed?
The Wwft takes a risk-based approach. For most customers, standard customer due diligence is enough. Enhanced due diligence is needed where the risk is higher. The law names a number of fixed cases:
- PEPs. The customer or the UBO is a politically exposed person, a family member of one or a close associate. Read more in What is a PEP?
- High-risk countries. The customer is established in, or has a link with, a third country on the EU list of countries with strategic deficiencies.
- Complex or unusual transactions. Transactions that are unusually large, follow an unusual pattern or have no clear economic or lawful purpose.
You must also recognise higher risks yourself. Examples are an unnecessarily complex ownership structure, a higher-risk sector, frequent cash payments or a customer who gives no clear reason for the relationship. Your own risk assessment determines which signals count for your organisation.
Which extra measures do you take?
Enhanced due diligence builds on the standard investigation. You do everything you would normally do, and more. The right measures depend on the risk. Common measures are:
- More information on the customer and UBO. You request additional details and check them against independent sources. For establishing the UBO, see What is a UBO?
- Source of wealth. You investigate how the customer built up their wealth, for example through salary, the sale of a business or an inheritance.
- Source of funds. You establish where the money used in the relationship or transaction comes from.
- Purpose of the relationship and of transactions. You ask further about the reason behind the relationship and behind notable transactions.
- Senior management approval. A manager with sufficient authority decides whether the relationship is entered into or continued.
- Enhanced monitoring. You review the file more often and look more critically at transactions and changes.
If you identify an unusual transaction during the investigation, you report it to FIU-Nederland, the Dutch Financial Intelligence Unit.
Evidence and sources
Statements from the customer are a starting point, not an end point. In enhanced due diligence you want to substantiate the customer's explanation. Think of annual accounts, deeds of sale, notarial documents, bank statements or public sources. The higher the risk, the stronger the evidence must be.
Also look at what does not add up. Does the wealth fit the customer's age and profession? Does the size of the transactions match the company's activities? A good analyst looks for consistency across all documents.
Recording your reasoning
A supervisor wants to be able to follow how you reached your decision. For each file, record:
- why you carried out enhanced due diligence
- which measures you took and which sources you used
- what you found, including anything that raises questions
- who made the decision and on what basis
- how often you will review the relationship again
A high risk does not mean you must refuse the customer. You may enter into the relationship if you understand the risk and can manage it. If the investigation cannot be completed, or important questions remain unanswered, you must not enter into the relationship or you must end it.
What changes with the AMLR?
From 10 July 2027 the European Anti-Money Laundering Regulation applies. Enhanced due diligence remains a fixed part of it. The rules will, however, become more uniform across the EU. It is sensible to test your current approach now. Read more in AMLR 2027: what changes for your KYC?
Doing it yourself or outsourcing it
Enhanced due diligence takes time, experience and a critical eye. Many organisations carry it out themselves, often with a small team that also handles the standard files. During peaks or for complex files, it can help to outsource the execution to specialists, such as an experienced CDD analyst. You then remain responsible for the policy and for the decision about the customer.