Home > Corporate Intelligence Services > Enhanced Due Diligence

Enhanced Due Diligence

What is enhanced due diligence?

Enhanced due diligence (EDD) is the deeper level of investigation reserved for higher-risk situations, where a standard check is not enough to give you confidence in a counterparty, client or transaction. It goes beyond confirming who a party is and into the harder questions: who ultimately owns and controls them, how have they behaved in the past, and are there any reputational, legal or integrity concerns that ordinary screening would miss.

At Maddocks Insight, EDD means human-led, primary-source research, conducted in local languages, in the jurisdictions that matter. We do not simply run a name through a database and forward the results. We verify, corroborate and interpret, so that what you receive is intelligence you can act on, not a list of unresolved hits.

When is enhanced due diligence needed?

Standard checks are adequate for low-risk, routine relationships. Enhanced due diligence is warranted when the risk profile is higher, for example:

• onboarding a client or counterparty in a high-risk jurisdiction or sector
• screening an M&A target, investment, or joint-venture partner before a deal closes
• a politically exposed person (PEP), sanctions, or adverse-media flag that needs to be properly resolved rather than left open
• complex or opaque ownership structures where the ultimate beneficial owner is not readily apparent
• verifying a subject's sources of wealth/funds
• third-party and supplier risk under an anti-bribery and corruption (ABC) compliance programme
• emerging concerns about an existing relationship that justify a closer look

If you are unsure whether a situation calls for standard or enhanced due diligence, we are happy to advise before any work begins.

What does an enhanced due diligence report comprise?

Every EDD assignment is shaped by the specific risk and the questions you need answered. As a general rule, an enhanced due diligence report will draw on:

• verification of corporate registration details and identification of the ownership and shareholding structure, including the ultimate beneficial owners
• in-depth research into the reputation, track record and modus operandi of the subject, its directors and major shareholders
• searches of litigation records, court filings, insolvency and regulatory actions in the relevant jurisdictions
• screening against sanctions lists, watchlists and PEP databases, with each hit verified rather than simply reported
• adverse media research conducted in local languages, including through specialised databases
• analysis of government links, political exposure and any indication that such connections may have been misused
• sources of wealth assessment, where required
• mapping of associated networks and undisclosed relationships

Where a situation demands it (for instance in support of litigation or asset recovery) we extend the scope to reconstruct the history of a dispute, trace assets across jurisdictions, or establish the background of other parties and expert witnesses.

What red flags can enhanced due diligence uncover?

The value of enhanced due diligence lies in what it surfaces before a relationship is formalised, or before a problem escalates. A thorough investigation routinely brings to light concerns that a standard screening leaves buried, including:

• Undisclosed or obscured ownership: ultimate beneficial owners hidden behind nominee shareholders, layered holding structures or offshore vehicles
• Hidden litigation and disputes: court cases, judgments, insolvency proceedings or regulatory actions that a subject has not disclosed, particularly in jurisdictions where records are difficult to access
• Sanctions and watchlist exposure: direct or indirect links to sanctioned individuals, entities or jurisdictions, including connections that only become apparent once ownership is properly mapped
• Adverse media and reputational concerns: allegations of fraud, corruption, organised crime or other misconduct, often reported only in local-language sources
• Politically exposed persons and state links: undisclosed political connections, or indications that such relationships have been used improperly to win business or influence outcomes
• Conflicts of interest and undisclosed relationships: connections between parties that should be at arm's length, or ties to competitors, agents or intermediaries that change the risk picture
• Integrity and conduct issues: past involvement in bribery, sanctions-busting, environmental or labour violations, or other conduct that creates legal and reputational risk

Identifying a red flag is not, in itself, a reason to walk away. The purpose of enhanced due diligence is to give you a clear and verified picture, so that you can weigh the risk, seek further assurances, or structure a relationship with the right safeguards in place. Oftentimes such findings are also helpful in negotiations, e.g. in the context of an M&A deal.

How is our approach different?

Much of what is sold as enhanced due diligence is, in practice, an automated database search. Our approach is different in three respects.

1. We work in local languages. Our team combines deep language skills with regional expertise across Europe, the Middle East and North Africa, China, sub-Saharan Africa and the Americas. Working from original sources, rather than relying on translated material, gives a richer and more accurate picture of any subject.
2. We use proprietary tools where public records fall short. In several jurisdictions where official records cannot be searched effectively, we have made challenging public datasets reverse-searchable, including corporate registries in Lebanon, Belgium and Luxembourg, or civil litigation records in Dubai. Where conventional due diligence hits a dead end, these resources often hold the answer.
3. We are a boutique, and the principal does the work. Engagements are overseen personally by our founder, not delegated down a chain. As a specialist consultancy, we have both the expertise and the flexibility to respond efficiently and deliver exactly what the situation requires, even in difficult jurisdictions.

Who we work for

Our enhanced due diligence work supports:

• International law firms: for transactional, litigation and asset-tracing matters
• Accountancy and Big Four firms: as a specialist research partner
• Risk consultancies: including discreet, white-label and subcontracted assignments
• Corporates and compliance teams: for client onboarding, third-party screening and ABC compliance

Enhanced due diligence and regulatory compliance

Enhanced due diligence is central to meeting obligations under the UK Bribery Act, the US Foreign Corrupt Practices Act (FCPA), and anti-money laundering requirements. Regulators in both the UK and US have shown themselves willing to pursue companies of all sizes for failings related to bribery, corruption and inadequate checks on third parties, regardless of where a company is headquartered. A properly conducted EDD process is both a safeguard against regulatory sanction and reputational harm, and evidence of the diligence regulators expect.

Discuss an enhanced due diligence assignment

If you have a counterparty, target or client that warrants a closer look, we would be glad to help. Contact us to discuss your enhanced due diligence needs, and we will respond promptly.