What does Enhanced Due Diligence (EDD) require for high-risk customers?

Enhanced Due Diligence (EDD) is a process implemented by financial institutions and other entities to identify and mitigate risks associated with high-risk customers. The correct option emphasizes the importance of conducting thorough background checks and continuous monitoring of transactions for these individuals. This is essential because high-risk customers may be involved in activities that carry an increased risk of money laundering, fraud, or other financial crimes.

Background checks involve investigating a customer's identity, reputation, and history to assess their risk level accurately. Additionally, ongoing monitoring of transactions allows institutions to detect unusual or suspicious behavior that may indicate illegal activity. This proactive approach helps to protect the organization and comply with regulatory requirements aimed at preventing financial crimes.

In contrast, the other choices do not accurately reflect the rigorous requirements of EDD. For example, solely checking credit history does not provide a comprehensive understanding of a customer's background or potential risks. Ignoring prior habits of the client undermines the importance of historical behavior in assessing risk. Lastly, while providing legal counsel can be beneficial, it is not a standard requirement of EDD for high-risk customers. Thus, the comprehensive nature of conducting background checks and monitoring transactions is what sets EDD apart and justifies its necessity for high-risk customers.