Enhanced Due Diligence (EDD) represents the next level of customer scrutiny for businesses in Bahrain dealing with high-risk clients or complex financial arrangements. Understanding when and how to apply EDD is crucial for regulatory compliance and protecting your organisation from financial crime.
Enhanced due diligence is an intensive investigation process applied to customers, transactions, or business relationships that present higher risks of money laundering, terrorist financing, or other financial crimes. EDD goes significantly beyond standard Know Your Customer (KYC) procedures, requiring deeper analysis and additional verification measures.
While customer due diligence (CDD) establishes basic customer identity and risk, EDD involves comprehensive investigation into:
The Central Bank of Bahrain (CBB) mandates Enhanced Due Diligence in specific circumstances where risk is elevated. Businesses must apply EDD when dealing with:
Politically exposed persons (PEPs)
Current or former government officials, senior politicians, military leaders, judicial figures and their family members or close associates.
High-risk jurisdictions
Customers from or conducting transactions with countries identified by the FATF or CBB as having weak AML controls or high corruption levels.
Complex ownership structures
Entities with opaque beneficial ownership, multiple layers of companies, or involvement of offshore jurisdictions.
Unusual transaction patterns
Activities that don't align with the customer's stated business purpose or profile.
Correspondent banking
Relationships with foreign financial institutions, particularly in higher-risk countries.
High-value transactions
Large or frequent transactions that exceed normal risk thresholds.
Adverse information
Customers linked to criminal activity, sanctions violations, or negative media coverage.
Implementing robust EDD processes provides multiple layers of protection:
Regulatory compliance
Meeting CBB requirements avoids penalties, license restrictions, and regulatory enforcement actions that can devastate a business.
Risk mitigation
Thorough investigation prevents your business from becoming a conduit for money laundering or terrorist financing.
Reputational protection
Association with financial criminals can destroy years of brand building and customer trust.
Informed decision-making
Comprehensive information enables better choices about accepting, continuing, or terminating business relationships.
Legal defence
Documented EDD demonstrates good faith compliance efforts if questions arise later.
Step 1: Risk classification
Determine whether a customer or transaction requires EDD based on established risk criteria and regulatory triggers.
Step 2: Information gathering
Collect additional documentation including detailed financial statements, corporate registries, tax records and declarations of source of wealth.
Step 3: Verification and analysis
Validate provided information through independent sources, public records, commercial databases and specialist intelligence services.
Step 4: Background research
Conduct comprehensive searches including adverse media screening, sanctions checks, PEP databases and reputational analysis.
Step 5: Senior review
Require approval from senior management or compliance committees before establishing or continuing high-risk relationships.
Step 6: Enhanced monitoring
Implement more frequent reviews and intensive monitoring for EDD customers.
PEPs present unique challenges requiring specialised approaches. Bahrain businesses must:
PEP status extends to family members and known close associates, requiring thorough relationship mapping.
AMAN provides comprehensive enhanced due diligence services tailored to Bahrain's regulatory environment. Our specialised capabilities include:
Global intelligence access
Proprietary databases and information sources covering beneficial ownership, PEPs, sanctions and adverse media worldwide – without language barriers.
Experienced investigators
Human intelligence professionals skilled in complex financial crime investigations.
