Glossary
CDD (customer due diligence)
CDD is the set of identification, verification and risk-assessment steps an institution must complete for every customer under AML rules.
CDD (customer due diligence) explained
Customer due diligence is the formal, regulator-defined version of KYC. The FATF Recommendations describe its core measures: identify the customer and verify identity using reliable sources, identify the beneficial owner, understand the purpose and intended nature of the relationship, and conduct ongoing monitoring of transactions against that understanding.
CDD is risk-based. A salaried individual opening a savings account needs standard measures; a customer or product that presents higher risk needs enhanced measures, and in some low-risk cases simplified measures may be allowed where the regulator permits them.
For example, a customer whose declared occupation is a market trader but whose account receives regular large foreign transfers has activity that does not match the CDD profile, which should prompt a review.
Why it matters in life insurance
CDD requirements for Zambian institutions are set out in AML law and in the directives of each sector regulator, and the FIC issues guidance on how they apply. Documenting the risk rating and the reasons for it is as important as collecting identity documents. ERMAML, the Ontech Risk & Compliance Suite, assigns and re-scores a customer risk tier from onboarding data and behaviour, and links every CDD document and decision to the customer record.
Related terms
KYC (know your customer) · EDD (enhanced due diligence) · Beneficial ownership