EDD goes beyond identity to the origin of the money. Firms seek documentary evidence of wealth creation, such as business sale documents, inheritance records or audited accounts, and corroborate it independently.
Triggers include politically-exposed-person status, higher-risk jurisdictions, complex ownership chains, correspondent banking relationships, and customers whose activity involves cash or virtual assets at scale.
From the customer's side EDD feels intrusive and slow. The alternative for the firm is to decline the relationship, which is why de-risking has become common in categories firms judge not worth the supervision cost.
Related: customer-due-diligence, politically-exposed-person, source-of-funds, sanctions-screening, anti-money-laundering