What does Enhanced Due Diligence (EDD) aim to achieve?

Enhanced Due Diligence (EDD) is a crucial aspect of risk management in the financial services sector, particularly in combating money laundering and terrorist financing. EDD is implemented when a customer or transaction presents a higher risk of being involved in illicit activities. The primary aim of EDD is to mitigate these risks by conducting a more thorough examination and analysis of the customer’s background, business activities, and sources of funds.

This involves gathering additional information beyond standard due diligence procedures, such as verifying identities, understanding the nature of the customer's business, and monitoring transactions more closely. By doing so, financial institutions can better identify and manage potential threats, ultimately contributing to the integrity and security of the financial system.

Thus, the correct answer reflects the primary goal of EDD, which is to address and reduce the heightened risks associated with financial transactions that could potentially aid in money laundering and terrorist financing activities.