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Enhanced Due Diligence (EDD) specifically refers to the process of performing additional scrutiny on high-risk customers and transactions in the context of financial practices. This heightened level of diligence is essential when dealing with clients or transactions that present a higher risk of money laundering or other financial crimes. Financial institutions are required to implement EDD as part of their Anti-Money Laundering (AML) compliance programs to ensure they thoroughly understand the risk associated with these customers.

This can include collecting further documentation about the customer's identity, the nature of their business, the source of their funds, or monitoring their transactions with more rigor than what is applied to lower-risk clients. By performing EDD, financial institutions aim to mitigate potential risks associated with high-risk customers, thus preventing illicit activities.

The other options do not accurately reflect the definition or purpose of EDD. A basic level of scrutiny lacks the depth needed for high-risk scenarios, a standard compliance measure for all clients does not take into account the varying levels of risk, and monitoring transactions only after they occur does not involve the proactive measures that EDD entails.