“TRUST STARTS & ENDS WITH THE TRUTH”
“TRUST STARTS & ENDS WITH THE TRUTH”
Matt is both the company founder and a nationally renowned private investigator. Matt is an intelligence specialist who excels in detecting and preventing the illegal interception of communications and in providing high-tech covert surveillance. Matt has years of hands on experience in the investigation industry and has developed a reputation for incorporating state of the art technology and innovative ideas to provide effective solutions for his clients. Matt also serves as Treasurer for the Executive Board of Directors of FALI, The Florida Association of Licensed Investigators.
Enhanced due diligence (EDD) in banking is the extra customer information and closer monitoring a bank applies to customers it rates as higher risk. US regulations spell out EDD for a few account types, including certain foreign correspondent accounts and private banking accounts tied to senior foreign political figures. Every other case follows the bank’s own rules, and we work through the same questions in private due diligence investigations.
Enhanced due diligence is customer due diligence with more information and closer review, applied to the same customer once the bank rates that customer as higher risk. Customer due diligence (CDD) is the baseline every customer gets. Under FinCEN’s CDD rule, a bank has to understand the nature and purpose of each customer relationship, build a customer risk profile, and monitor the account for suspicious transactions.
The FFIEC BSA/AML Examination Manual, the handbook federal bank examiners work from, describes EDD as collecting additional information about customers that pose heightened risk. Risk varies even inside a higher-risk category, the manual adds, so the extra steps can differ from one customer to the next.
CDD works like the ID check at a building’s front desk, where every visitor shows a badge and signs the log. EDD is the conversation that starts when a visitor asks for the vault key: who sent you, what are you storing, and where did it come from.
The table below sets five common assumptions about EDD against what US federal rules say.
| What people assume | What US rules say |
|---|---|
| EDD is a fixed legal checklist | Each bank's procedures define when and what extra information it collects, based on customer risk |
| Every high-risk customer legally requires EDD | Regulation names two account types, and the bank's risk-based procedures govern the rest |
| Politically exposed persons always trigger EDD | The CDD rule requires no unique extra steps for PEPs |
| EDD replaces CDD | EDD adds to CDD for the same customer |
| Banks must refresh EDD files on a set schedule | Updates are event-driven, and the rule sets no categorical periodic requirement |
EDD is one part of KYC. Know Your Customer (KYC) is the banking industry’s umbrella term for identifying customers and understanding their activity, and it covers the Customer Identification Program, customer due diligence, and ongoing monitoring. EDD is the deeper review inside that process, reserved for customers with a higher risk profile.
CDD applies to every customer and establishes who the customer is, what the account is for, and what activity to expect. EDD applies to customers with a higher risk profile and adds information such as source of funds, source of wealth, and business details, plus closer review at account opening and more often during the relationship.
US regulation requires enhanced measures in two specific situations and leaves every other case to the bank’s own risk-based procedures. Both situations come from Section 312 of the USA PATRIOT Act.
The first situation covers correspondent accounts a US bank holds for certain foreign banks. EDD applies when the foreign bank operates under an offshore banking license, or under a license from a country designated as non-cooperative with international anti-money laundering principles or as warranting special measures by the Treasury Secretary. For a foreign bank in those categories whose shares are not publicly traded, the US bank must identify each owner holding 10 percent or more of any class of its securities.
Private banking is the second situation. Under the federal rule, a private banking account is one that requires a minimum aggregate deposit of at least $1 million, is held for a non-U.S. person, and is managed by a bank liaison. When a senior foreign political figure is a nominal or beneficial owner of such an account, the bank must apply enhanced scrutiny designed to detect and report the proceeds of foreign corruption.
Outside those two situations, the bank’s own policies decide. The FFIEC manual says a bank’s procedures should define both when and what additional information it collects, based on the customer’s risk profile. Products and services, customer type, and geographic location are the risk categories the manual names.
Internationally, the Financial Action Task Force (FATF) sets the standards that countries adapt into their own rules. Requirements in other countries differ from the US federal rules described here.
Under US rules, a politically exposed person (PEP) does not automatically require EDD. The Federal Reserve, FDIC, FinCEN, NCUA, and OCC said in a joint statement on August 21, 2020 that the CDD rule creates no requirement for a separate set of due diligence steps for PEPs. Due diligence should match the risk each relationship presents.
A material change in the account or the customer triggers a fresh review. The FFIEC manual lists significant unexplained changes in account activity, changes in employment or business operations, changes in business ownership, red flags from suspicious activity monitoring, law enforcement inquiries, and negative media results. Updates are event-driven, and the rule sets no fixed schedule.
Banks collect information that explains where a customer’s money comes from and what the account will be used for. The FFIEC manual gives examples of what a bank may request from a customer with a higher risk profile:
Negative media searches are another tool the manual mentions, used where the customer’s risk supports the extra review.
Example (illustrative, not a client case): A Tampa importer has banked with the same institution for six years, with steady domestic deposits. Over one quarter, the account starts receiving large wires from a new supplier in a country the bank rates as higher risk. The bank asks for the supply contract, recent invoices, and the owner’s explanation of the new relationship. Once the documents match the activity, the bank updates the customer’s risk profile and the account carries on.
A request like that one is easier to answer when the documents and the explanation tell the same story.
Source of funds is the origin of the specific money going into an account or transaction, such as a salary payment, a property sale, or a business invoice. Source of wealth is how the customer built their overall assets over time, such as a career, a company, or an inheritance. Banks may ask for either or both.
Investigators do the same kind of fact-checking for people and companies that have no compliance department. Banks run EDD because the Bank Secrecy Act requires a due diligence program. An investor, a private lender, or a business owner weighing a partner faces the same questions about a counterparty and has to answer them alone.
A due diligence investigation at Southern Recon Agency checks the records a self-reported application leaves out. Our reviews cover professional and personal work history, national civil and criminal court history, regulatory records and professional licenses, undisclosed corporate ownership interests, and any trail of failed businesses.
Due diligence is one part of our broader corporate investigation work in Florida, which also covers fraud, insider threats, and intellectual property theft.
Weighing a partner, investor, or borrower you cannot fully verify?
A due diligence investigation checks the history behind the name and documents what the records show.
Find out who is on the other side of the deal
Confidential, and quoted after an assessment of your situation.
A bank that cannot complete due diligence has four options under its required procedures: refuse to open the account, suspend transaction activity, file a suspicious activity report (SAR), or close the account. Federal rules require banks to keep those procedures in place for foreign correspondent accounts and private banking accounts.
For a customer, that list explains why an unanswered request can end with a restricted or closed account.
Your bank is asking because federal rules require it to understand the nature and purpose of your account and to watch for activity that does not fit your profile. A large deposit, a new pattern of international transfers, or a change in your business can prompt the question. A sale contract or pay records usually answer it.
An EDD request means the bank rated the account as higher risk, which is a different thing from suspecting a crime. Under the FFIEC manual, a lone indicator does not settle a customer’s risk level in either direction. Your industry, the countries you send money to, or the products you use can each raise a rating.
The main 2026 change removed a repeat check on company ownership. On February 13, 2026, FinCEN issued an order that excuses banks from re-identifying and re-verifying beneficial owners each time an existing legal entity customer opens a new account.
Banks still verify beneficial owners in three circumstances: when a legal entity first opens an account, when the bank learns facts that call earlier ownership information into question, and when the bank’s risk-based procedures require it. Suspicious activity monitoring and the duty to keep customer information current on a risk basis remain in force.
Ownership checks still matter at onboarding. The 25 percent beneficial ownership threshold applies to legal entity customers at every risk level, and shell entities are one of the vehicles behind synthetic identity fraud, where a fabricated person or business opens accounts with a mix of real and invented details.
Enhanced due diligence is the extra information and closer monitoring a bank applies to customers with a higher risk profile, layered on top of standard customer due diligence. US regulation writes it in for certain foreign correspondent accounts and for private banking accounts tied to senior foreign political figures, and leaves other cases to each bank’s risk-based procedures. Politically exposed persons do not trigger it automatically under the CDD rule. Banks may ask about source of funds, source of wealth, and business activity. Since February 2026, banks no longer have to re-verify a company’s beneficial owners at every new account.
Have a specific person or company you need checked?
Southern Recon Agency investigates the work history, court records, and business ties behind a name, and we document what we find.
Request a confidential case review
Call (844) 307-7771. Southern Recon Agency is a Florida-licensed private investigation agency (License A1400197).
Federal regulation requires enhanced measures for specific accounts: correspondent accounts for certain foreign banks, and private banking accounts where a senior foreign political figure is an owner. For other customers, the law requires risk-based customer due diligence, and each bank’s procedures decide when additional information is collected. This answer covers US federal rules only.
Yes. Due diligence continues for the life of the account. A bank reassesses a customer’s risk profile when it learns of a material change, such as unexplained shifts in account activity or new business ownership. The CDD rule sets no fixed schedule for updating customer information, though a bank may choose to run periodic reviews based on risk.
A senior foreign political figure is a current or former senior official of a foreign government, in any branch including the military and the courts. Senior officials of major foreign political parties and senior executives of foreign government-owned commercial enterprises also count. The definition extends to immediate family members and widely known close associates.
The Financial Action Task Force (FATF) is the intergovernmental body that sets international standards against money laundering and terrorist financing. Its Recommendations call for additional measures in higher-risk situations, including business relationships with politically exposed persons. Each country writes those standards into its own law, so the details differ by jurisdiction.
A licensed private investigator can research a prospective partner’s work history, court records, regulatory and licensing records, and business ownership, then report what the records show. The work relies on lawful records and interviews, and what turns up depends on how much of a paper trail exists. Investigator licensing is set state by state.
Matt Aubin is the Founder and Managing Partner of Southern Recon Agency, a Florida-licensed private investigation agency (License A1400197) based in Orlando, which he started in 2010. He is a Certified TSCM Technician, a Certified Digital Forensics Examiner, and a Florida Board Certified Investigator, and a court-qualified expert witness in cyber intelligence and cyber forensics. He is a member of the U.S. Secret Service Miami Electronic Crimes Task Force and FBI InfraGard Tampa.
Everything in this article is general information about US federal rules and is not legal or financial advice. For guidance on a specific situation, consult a licensed attorney or compliance professional.