Customer due diligence (CDD) is a process that collects relevant information about a customer and evaluates the information to determine the risk of money laundering, terrorist financing and other criminal activities to the financial institutions (FIs) and organizations.

Elements of a CDD program:

  • Full identification of customer and business entities, including the source of funds and wealth when appropriate.
  • Development of transaction and activity profiles of each customer’s anticipated activity
  • Definition and acceptance of the customer in the context of specific products and services
  • Assessment and grading of risks that the customer or the account present
  • Account and transaction monitoring based on the risks presented
  • Investigation and examination of unusual customer or account activity
  • Documentation of findings.