What's the difference between CDD and EDD? - Onfido

Customer due diligence (CDD) and enhanced due diligence (EDD) are different tiers of know your customer (KYC) processes completed by ... SupportSignin CreatedwithSketch. Getintouch Watchademo Solutions Oursolutions TheOnfidoRealIdentityPlatform Buildtrustusingaflexible,end-to-endidentityverificationsolution. VerificationSuite Getfair,fast,andaccurateidentityverificationpoweredbyAI. OnfidoStudio Orchestrateverificationsandsignalsintoeasy-to-manageworkflows. OnfidoAtlas™ Getfair,fast,andaccurateidentityverificationpoweredbyAI. Watchaproductdemo VisitourdemopagetoseehowOnfido'sidentityverificationservicescanhelpyourbusiness. 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Howdoyouboostcustomeracquisitionwithidentity? Seemore Developers Developers&API DeveloperHub APIreference Support Servicestatus Company Ourcompany AboutOnfido Careers Contactus Press Partnershipprogram CenterofAppliedAI SigninSupport Watchademo Getintouch CENTRED'AIDESECONNECTER CreatedwithSketch. Contactez-nous Voirunedémo Solutions NOSSOLUTIONS NOSSOLUTIONS Quelsquesoientvosbesoinsenmatièredevérificationd'identité,nousavonslasolution. Vérificationdedocuments Accueillezvosclientsentoutesécuritéenvérifiantdeprimeabordleursdocumentsd'identité Vérificationbiométrique Utilisezl'analysebiométriquepourconfirmerl'identitédutitulaired'undocument Authentication Buildatrust-firstidentityandaccessjourneywithongoingauthentication QUISOMMES-NOUS? Nosvidéosdedémonstrationvousaiderontàcomprendrecommentlesservicesdevérificationd'identitéd'Onfidopeuventaidervotreentreprise. 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Blog Parcourezlestoutesdernièresinformations,misesàjouretétudes Voirtouteslesressources DERNIERSARTICLES Fichededonnées:Onfido&lesServicesFinanciers Utilisez-vouslameilleureapprochepourvérifierl'identitédevosclients Chacunestunique:Pourquoilabiométrieestindispensablepourauthentifierl'identiténumérique Fraudeenligneàl'identité:Lestentativesdefraudemontentenflècheen2020aveclapandémie VOIRPLUS Développeurs DÉVELOPPEURS&API DeveloperHub APIreference Centred'aide Étatduservice Entreprise NOTREENTREPRISE Àproposd'Onfido Carrières Nouscontacter Presse Partners CenterofAppliedAI Centred'aideSeconnecter Voirunedémo Contactez-nous Home » Blogs » What’sthedifferencebetweenCDDandEDD? × SharethisArticle What’sthedifferencebetweenCDDandEDD? SharethisArticle Customerduediligence(CDD)andenhancedduediligence(EDD)aredifferenttiersofknowyourcustomer(KYC)processescompletedbybusinessesontheircustomers.They’remandatedbyregulatoryorganizationsformanydifferentindustries,butaremostprevalentacrossfinancialservices.Regulationvariesbothdependingonwhereintheworldyouareandinwhichindustryyouoperate–andyoushouldalwaysseeklocaladvicedependingonyourspecificcircumstances–buttherearesomebroadsimilaritiesregardlessofgeographyandindustry. BusinessesmustcomplywithCDDandEDDrequirementsorfaceAMLfinesorregulatorypenalties,likelicensesuspensionsorrevocations.AccordingtoFenergoregulatorsissued$5.37billionofAMLfinesin2021.Butwhat’sthedifferencebetweenCDDandEDD,andwhenshouldbusinessesuseone,versustheother?Let’sdiveintothedifferences. CDDvsEDD CDDandEDDaretypesofKYCprocesses.CDDinvolvesidentifyingthecustomerbycheckingprovideddataagainstdatabases,orsolutionssuchasdocumentandbiometriccheck.Thisistypicallyrequiredataccountopeningandtoenablehigh-risktransactions. Ifacustomerisjudgedtobelowrisk,theymightalsoonlybesubjecttosimplifiedcustomerduediligence,wheretheonlyrequirementistoidentifythecustomer,butnotverifytheiridentity.   EDDisrequiredasanadditionaltypeofstep-upKYCprocessforcustomerswhoaredeemedtobehigh-risk.Acustomermaybedeemedhigh-riskduetotheirlocation,professionorpoliticalexposure.TherequirementsforcompletingEDDvarybasedonlocalregulation,butitiscommonlyrequiredifenteringintoabusinessrelationshipwithapoliticallyexposedperson(PEP),ifthetransactioninvolvesapersonfromahigh-riskorsanctionedcountry,oranyothersituationwherethereisincreasedriskofmoneylaundering. WhenisEDDneeded? ThethresholdforneedingtoconductEDDvariesdependingonindustryandgeography.Forfinancialservices,theFATF(FinancialActionTaskForce)hasoutlinedrecommendationsthatseektostandardizetheinternationalresponsetopreventmoney-launderingandterroristfinancing. OneparticularprovisionfromtheFATFisthatpoliticallyexposedpersons(PEPs)areclassedashigh-riskbecausetheyareatdisproportionateriskofbeingabusedforthepurposesofmoneylaundering.Thismeansthatinstitutionsarerequiredtoverifytheirsourceoffunds(SOF),andpossiblyongoingcheckstocontinuetomonitorforsuspiciousactivitythatmayindicateillegalactivity.Onesuchcheckistransactionmonitoring,payingparticularattentiontoanydiscrepanciesbetweentheprojectedvalueofgoodsandservices, andtheamountactuallypaid–whichmayindicatesuspiciousactivity.Additionaltypesoftransactionmonitoringarevelocityrulesthatmonitorwhetherspendingiswithinanexpectedpattern,andscreeningforhigh-riskmerchants.  Businessesmayalsoberequiredtoundertakeadversemediachecks,sotheyareawareofanyestablishedlinkstoorganizedcrimeorpreviouslinkstofinancialcrime.  Institutionsarealsorequiredtokeeprecordstoremaincompliant,butthetimetheyneedtobekeptfor,andlevelofdetailthatneedstoberetainedisdependentonlocalregulation. HowtonavigateEDD? ThereareanumberofwaystocomplywithEDDrequirementswhicharedependentonspecificcircumstances.But,afavoredapproachisriskscoring–wherebyabusinessassessesandscorestheriskofapotentialcustomerbylookingatdifferentriskfactors,whichmightbecustomerorgeographybased. Examplecustomerriskfactors: Dotheyoperateacashintensivebusiness? Aretheypoliticallyexposed?    Examplegeographicalriskfactors–aretheylocatedin: CountrieswithoutsufficientAML(anti-moneylaundering)andcombatingthefinanceofterrorism(CFT)regulation Non-FATFmembercountry Countriesfacingsanctionsandembargoes Countrieswithareputationforextensivelevelsofcorruption Countriesblacklistedforfinancingorsupportingterroristactivities   IfacustomeristhenjudgedtorequireEDDchecks,abusinessmaylookat: Backgroundinformation Sourceoffunds Sourceandstructureofwealth Adversemediascreening   WhyareCDDandEDDnecessary?  CDDandEDDchecksaremandatedbyglobalandlocalregulation.AttheirheartCDDandEDDchecksaredesignedtodisruptcriminalactivitybypreventingillegalactivitiessuchasfraud,moneylaunderingandterroristfinancing. HowdoesOnfidofitintoyourregtechstack? Wespecializeinremotecustomeridentityverification–ensuringthatapotentialcustomeriswhotheysaytheyare.OursuiteofidentitychecksenablesbusinessestoverifycustomeridentityusingIDrecord,proofofaddress,identitydocumentandbiometricchecks.Wealsoprovidewatchlistchecksonanimmediateandongoingbasis–sobusinessescanidentifypoliticallyexposedpersons(PEPs)andpersonssubjecttosanctions.Wecontinuallyrefreshandindexourdatasourcesatminimumevery24hours,sobusinessesarekeptuptodateiftheyneedtoconductongoingmonitoring.Wehelpover1,500businessesworldwidenavigateregulatoryrequirements,growintonewmarkets,preventfraudandofferusersasmooth,fastexperience. Ifyou’dliketolearnmoreabouthowOnfidocanhelpyounavigateyourKYCrequirementspleasegetintouchtotalktoanidentityexpert. PreviousArticle TescoBankpartnerswithOnfidotoenablesecure,streamlinedonboardingforTescoClubcardPay+customers Rapididentityverification,usingbiometrictechnology,enablesaseamlesscustomerjourneyforusers. NextArticle 5fraudpredictionsfor2022 Howdoyoustayonestepaheadofthefraudstersin2022?Inthisblogweexaminethetopfivetrendsthat... MostRecentArticles ‹ › 3waystoimproveyourverificationexperience Learnhowyoucanimproveyourverificationexperienceinjustthreestepstomaximizeyourcustomeraquisition. ReadArticle Onfido’sRealIdentityPlatformImprovesPerformanceby12xwithFullyAutomated,End-to-EndIdentityVerification RealIdentityPlatformimprovesfraudaccuracyby54%andfullyautomatesperformanceby12x ReadArticle DedicationtoDiversity,Equity,andInclusionatOnfido HearfromOndido'sHeadofDiversity,Equity,andInclusionaboutsomeoftheplanswehaveforaccessandbelonging. ReadArticle Onfido’sCEOMikeTuchentalksdigitalidentitywithFintechNexus Onfido’sCEOMikeTuchenisfeaturedonthelatestepisodeofFintechNexus'One-on-Onepodcast. ReadArticle FintechNexus:what’shappeningattheOnfidobooth? OnfidoisatFintechNexustalkingallthingsdigitalidentity,fraud,AIandregulation.Discovereverythingthat'sgoingonatourbooth. 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