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Customer Due Diligence (CDD)

Know-your-customer (KYC) involves gathering and verifying a customer's information before providing financial services, aiming to evaluate their identity. Conversely, customer due diligence (CDD) aims to determine the level of risk the customer poses to the business and is an ongoing process.

CDD encompasses three tiers: simplified due diligence, standard due diligence, and enhanced due diligence (EDD). Simplified due diligence is utilised for customers deemed low-risk, while enhanced due diligence is reserved for high-risk customers and may entail obtaining supplementary information, such as the source of funds, to assess potential risks.

CDD (and KYC) are essential aspects of the AML framework. KYC represents the initial step in verifying customer identities. CDD involves ongoing monitoring of existing customers to assess the potential risks they pose in money laundering or terrorist financing.

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