Customer Due Diligence (CDD) Basics

Customer due diligence (CDD) is the process a business uses to know who its customer is and to assess the risk that customer presents.

The core steps #

• Identify — obtain the customer’s identifying details.
• Verify — confirm those details against a reliable, independent source.
• Assess — understand the purpose and nature of the relationship and its risk.
• Monitor — keep records and review the relationship over time.

Levels of due diligence #

• Simplified — for lower-risk customers.
• Standard — the normal level for most customers.
• Enhanced — extra checks for higher-risk customers, such as politically exposed persons.

Why it matters #

Good CDD prevents fraud, money laundering and the misuse of services, and helps organisations meet their legal obligations.

This article is for general education and is not legal advice. Always confirm the latest requirements with the relevant regulator or your service provider.