Customer due diligence (CDD)

Customer due diligence (CDD) is the set of checks that banks, EMIs and other obliged entities must carry out on their clients under EU anti-money laundering law. It means identifying and verifying the client, identifying its beneficial owners, understanding the purpose of the relationship and monitoring it over time. For business clients, CDD is often called know your business (KYB).

The four CDD measures

Article 13 of the Anti-Money Laundering Directive (AMLD) sets out what CDD involves:

Identify the client and verify its identity from reliable, independent documents or data.
Identify the beneficial owner and take reasonable steps to verify who they are, including understanding the ownership and control structure of a company or trust.
Assess, and where needed obtain information on, the purpose and intended nature of the business relationship.
Monitor the relationship on an ongoing basis, including the payments made, so they stay consistent with what the provider knows about the client, its business and its risk profile.

The last measure is where transaction monitoring comes in, and it's why a provider can ask for updated documents years after onboarding. For business clients, the practical checklist is covered in know your business (KYB).

When CDD applies

when a business relationship starts, such as opening an account
for occasional transactions of EUR 15,000 or more, or transfers of funds above EUR 1,000
whenever there's a suspicion of money laundering or terrorist financing, whatever the amount
when the provider doubts information it collected earlier

CDD must normally be completed before the account opens.

Simplified, standard and enhanced

The depth of CDD follows the client's risk, under a risk-based approach.

Level	When it applies	What changes
Simplified	Lower-risk clients, such as listed companies or public authorities	Fewer or lighter measures; monitoring still applies
Standard	Most clients	The four measures above
Enhanced	Higher-risk clients, such as PEPs or links to a high-risk third country	More evidence, senior approval in some cases, closer monitoring: see enhanced due diligence

What a business client is usually asked for

a recent extract from the company register and the articles of association
an ownership chart down to every beneficial owner
identity documents for directors, beneficial owners and authorised signatories
a description of the business, its markets and its main counterparties
expected account activity: volumes, currencies and countries
evidence of the source of funds for the money coming in

If CDD can't be completed

A provider that can't complete CDD must not open the account or carry out the transaction, and must end an existing relationship. It must also consider whether to file a suspicious transaction report. This is one route to an account being closed, covered in debanking.

What changes under the AMLR

From 10 July 2027, CDD rules move into the EU Anti-Money Laundering Regulation (AMLR), which applies directly in every member state. The measures stay broadly the same, but the details become uniform across the EU instead of varying with national law. One visible change: CDD on occasional transactions starts at EUR 10,000 instead of EUR 15,000, and transfers of funds trigger it from EUR 1,000.

FAQ

KYC (know your customer) is the everyday name for the identity part of CDD. CDD is the legal term and also covers beneficial owners, the purpose of the relationship and ongoing monitoring.

It's ongoing. Providers review higher-risk clients more often and update records when something changes, such as new owners or a new line of business.

Usually yes. Each obliged entity stays responsible for its own CDD. EU law lets it rely on another regulated firm's checks only in limited cases, so most providers collect the documents themselves.

Related terms and sources

Know your business (KYB) · Ultimate beneficial owner · Enhanced due diligence · Politically exposed person · Source of funds · Risk-based approach · Transaction monitoring · Browse the full glossary

Last reviewed October 23, 2026Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

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