Enhanced Due Diligence (EDD) is essential for businesses in Saudi Arabia to manage risks linked to high risk clients and financial crimes.
As the Kingdom grows as a global business hub companies must adopt stricter checks to stay compliant with local and international regulations.
This article explores what EDD is why it’s crucial and how it supports safer business operations in Saudi Arabia.
What Is Enhanced Due Diligence in Saudi Arabia and Why Is It Crucial for Businesses?
Businesses apply Enhanced Due Diligence (EDD) to conduct intense investigation processes to reduce business risks in dealings with high risk individuals or entities.
Saudi Arabia has become the main business center of the Middle East which makes enhanced due diligence vital to protect business operations.
Organizations must follow strict due diligence rules because they face growing financial crime threats in their business activities.
As Saudi Arabia grows in international business value, companies that work need robust current due diligence programs.
This article will explain enhanced due diligence in Saudi Arabia.
What Is Enhanced Due Diligence?
When dealing with transactions displaying enhanced risk levels you need to perform a complete evaluation procedure known as Enhanced Due Diligence.
When there is an increased risk of money laundering or other criminal activities being performed a business partner requires special investigation.
Saudi Arabian businesses must perform thorough checks to comply with national policies and worldwide standards.
Financial businesses and organizations must carefully follow FATF guidelines to enforce strong security measures when dealing with customers from high risk countries.
Key Elements of the Enhanced Due Diligence Process in Saudi Arabia
Companies use these steps to check and evaluate the risks they face. Every EDD process includes these main features:
Risk Assessment
The Saudi Arabia enhanced due diligence process begins by analyzing possible risks related to either clients or deals. When doing a business assessment in Saudi Arabia the reviewer checks the business structure geographic site and transaction type.
The risk based approach directs the use of available resources to concentrate on high risk areas first.
Saudi Arabia saw major financial crime growth in 2024 by intensifying investigations on high risk real estate transactions from the rising international market sector.
The Saudi Arabian Monetary Authority reports that 30% of financial criminal cases involve real estate deals between local parties and global buyers.
Comprehensive Verification of Clients
Saudi companies must thoroughly examine all client information before starting business activities.
Businesses need to properly identify the client by verifying paperwork and screening against sanctions lists and corporate structures.
Businesses need to investigate client backgrounds in detail before proceeding.
Reviewing the Source of Funds
Identifying where clients get their money serves as the core function of the EDD examination. Businesses in Saudi Arabia need to confirm the legal source of funds for clients to prevent deals that come from criminal income.
For significant business deals and companies operating internationally, EDD checks are especially necessary to find criminal activity.
Transaction Monitoring
Examining transactions is a critical step in the EDD process. Saudi Arabian businesses need to monitor their transactions for signs of abnormal or illegal money movements.
Observers should watch for abnormal money transfers especially to countries or recipients that pose a high risk of misuse
Sanctions and Politically Exposed Persons (PEPs) Screening
The Saudi government follows world standards when it asks companies to check their clients against official sanctions lists and lists of Politically Exposed Persons.
A PEP is a major public figure or person with direct ties to government authorities who faces additional corruption or bribery dangers when working with someone else.
A detailed risk assessment shows who these suspicious persons are and track their behavior.
Onboarding of High Risk Clients
When working with clients who have higher risk, the business needs to conduct extra checks during the onboarding stage. The business needs to ask for more records while talking to clients and watch for any important updates to their risk status.
Bonus: Companies that include enhanced due diligence AML in their priorities strengthen both business protection and global financial security.
Enhanced Due Diligence Checklist for Saudi Arabia
Having a proper enhanced due diligence checklist Saudi Arabia guarantees you handle the process correctly. Businesses need to use this checklist to perform complete EDD procedures in Saudi Arabia.
Client Identification
- Collect personal and corporate details.
- Check identity through official government paperwork.
- Check against global sanctions lists.
Source of Funds Investigation
- Determine the source of money the client receives.
- Get bank records and business contracts from the client.
Risk Profiling
- Assess the client’s geographical location.
- Study the specific type of operations their client conducts.
- Understand the main reason behind the financial deal.
The Role of Enhanced Due Diligence in Saudi Arabia’s Anti Money Laundering (AML) Framework
Saudi Arabia relies heavily on enhanced due diligence to achieve its goals of fighting money laundering through its anti money laundering programs.
The nation enhanced its money laundering rules to fight financial crime while joining worldwide organizations that make companies track financial deals better.
Through updated AML rules, Saudi Arabia brought a 40% growth in suspicious transaction reports that financial institutions needed to report in 2025.
Organizations increasingly apply proper steps as part of their actions to stop possible financial crimes.
Want to discover the right steps to add advanced due diligence to your business operations? Click here to find new information about complying with Saudi Arabian regulations.
Conclusion
Enhanced Due Diligence (EDD) in Saudi Arabia is more than just a compliance step it’s a critical layer of protection against financial crimes.
With the Kingdom’s rising role in global commerce businesses must adopt a proactive approach by integrating thorough client verification transaction monitoring and risk assessment into their operations.
Following EDD procedures ensures not only legal compliance but also helps build a trustworthy and sustainable business environment.
FAQs
What is Enhanced Due Diligence (EDD)?
Enhanced Due Diligence is a deeper investigation process used by businesses to evaluate high risk clients or transactions.
Why is EDD important in Saudi Arabia?
Saudi Arabia faces rising financial crime threats. EDD helps companies comply with local and global anti money laundering (AML) regulations.
Who needs to perform EDD in Saudi Arabia?
Financial institutions real estate firms and international businesses operating in Saudi Arabia must conduct EDD on high risk clients.
What is included in an EDD checklist?
The checklist includes client identity verification source of funds investigation risk profiling sanctions screening and transaction monitoring.
How does EDD support AML in Saudi Arabia?
EDD strengthens AML compliance by enabling businesses to detect suspicious activities and report them to relevant authorities.
