What is EDD vs CDD vs KYC?
Customer Due Diligence (CDD) process involves identifying the customers, verifying their identity, conducting Customer Risk Assessment, i.e., evaluating the potential Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing (PF) risks such customers poses to the business, conducting Name Screening on the customer, etc.
Know Your Customer (KYC) is components of the CDD process. KYC involves identifying the customer and verifying their identity through authentic identification proofs.
EDD is a more rigorous and robust version of CDD and is applicable to customers that are categorised as high-risk during Customer Risk Assessment. EDD measures involve seeking additional information such as the Source of Funds and Source of Wealth, seeking senior management approval before onboarding the customer, etc, with the purpose of mitigating the high risk such customer poses to the regulated entity.
CDD, KYC, and EDD are all important parts of Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Countering Proliferation Financing (CPF) compliance program of an entity regulated under the AML/CFT/CPF laws of a country.
To learn more about the CDD process and its components, check out our comprehensive CDD guide here: