Due diligence refers to the comprehensive process of investigating and assessing the background, financial health, and potential risks associated with an individual, organisation, or transaction. In the financial crime compliance space, due diligence is critical for preventing illegal activities such as money laundering, fraud, and terrorist financing. It involves gathering information, verifying identities, and evaluating the potential risks of doing business with certain clients, counterparties, or jurisdictions. 

Compliance teams conduct different levels of due diligence, including Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), depending on the risk level associated with a client or transaction. For high-risk entities, more thorough investigations are required, such as scrutinizing beneficial ownership, past activities, and potential connections to criminal activity. Effective due diligence helps organisations comply with regulatory requirements, mitigate financial crime risks, and maintain the integrity of the financial system.