Definition
Customer Due Diligence (CDD)
Understanding the nature and purpose of a customer relationship well enough to develop a customer risk profile, and monitoring on an ongoing basis to maintain and update it.
By Bart Mierzejewski · Founder, FinCrime Desk · Reviewed Sep 19, 2026
Why it matters
The 2018 CDD Rule made four elements explicit pillars of an AML program, and beneficial ownership collection is the one that reshaped onboarding operations at every US institution. Most KYC roles on the market are CDD roles.
In practice
The four elements: identify and verify customers; identify and verify beneficial owners of legal entity customers; understand the nature and purpose of relationships to develop risk profiles; conduct ongoing monitoring to identify and report suspicious transactions and to maintain and update customer information. The fourth element is what makes KYC refresh a permanent operational function rather than a project.