Standard Customer Due Diligence (CDD) and Enhanced Customer Due Diligence (ECDD) are integral components of the anti-money laundering and countering financing of terrorism (AML/CFT) framework, each serving distinct roles in assessing and managing risks associated with customers. 

Standard CDD is the initial step in assessing and understanding the customer's risk profile. It involves obtaining and verifying the customer’s identity and obtaining information sufficient to determine whether ECDD should be required. This includes information on the nature and purpose of the proposed business relationship with you. The primary aim of standard CDD is to establish an understanding of the customer's identity, including any beneficial owners, the nature of the customer’s upcoming activities, transactions, and their risk profile. Standard CDD is required for most customers, however for some customers you may be required to undertake ECDD. 

ECDD goes beyond the requirements of standard CDD, targeting customers presenting higher risks. ECDD is necessary in specific circumstances when dealing with high-risk customers, activities, or transactions. ECDD involves a more thorough investigation, requiring you to obtain further information and verify that information according to the level of risk. This currently applies to the source of funds or wealth of the customer. However, effective 1 June 2024, a new regulation means in some circumstances, you may also need to obtain further information about the transaction, undertake enhanced monitoring of the business relationship or obtain senior management approval to continue the relationship. 

Our guidance provides further information on these requirements: Click here to read full guidance >> 

In essence, while standard CDD is a baseline procedure applicable to most customers, ECDD is a more in-depth examination that builds on standard CDD where the level of risk requires it, and thereby strengthening the overall effectiveness of AML measures.