DEFINITION
Simplified Due Diligence (SDD)
Simplified Due Diligence, or Reduced Due Diligence, is the simplest form of Customer Due Diligence that is used when a customer is seen as a low risk. Unlike Standard or Enhanced Due Diligence, SDD only requires simple background checks, often using publicly-available information and even skipping the verification step in some jurisdictions. However, the account is still monitored and can be assigned a higher level of Customer Due Diligence if necessary.
Synonyms
Reduced Due Diligence
Acronyms
SDD
Share
Synonyms
Reduced Due Diligence
Acronyms
SDD
Examples
An older individual wants to open a bank account where his pension can be deposited. The person has a clear and consistent financial history, resides in a country with low fraud rates, and only requires a limited account. In other words, they don’t need to make wire transfers nor make large deposits. From the bank’s perspective, this person can cause little to no damage even if they wanted to. Therefore, they are categorized as low-risk and put through Simplified Due Diligence.
FAQ
Who qualifies for Simplified Due Diligence?
Depending on the jurisdiction and the financial institution’s internal risk model, who qualifies for Simplified Due Diligence differs. Generally, individuals with limited or pension accounts in low-risk jurisdictions can qualify. Furthermore, heavily regulated legal entities, such as government bodies, publicly traded businesses, public infrastructure firms, and charities can qualify.
Why is Simplified Due Diligence performed?
In cases where a customer is considered low-risk, Simplified Due Diligence is performed to save resources and streamline the process. For example, if a government body initiates a transaction, there is no need to perform thorough KYB as governmental bodies are already heavily regulated and must stay compliant with AML/CFT regulations.
When is a customer considered low-risk?
While differences exist across different jurisdictions and financial institutions, low-risk customers are typically regulated businesses or individuals with limited accounts. Residing in a low-risk country is also an important factor in both cases.
Book your demo today and see why leading financial institutions
worldwide trust Atfinity to drive their digital transformation.
Book your demo today and see why leading financial institutions worldwide trust Atfinity to drive their digital transformation.