Customer due diligence (CDD, SDD, EDD)
Customer due diligence means identifying a customer, verifying that identity from reliable independent sources, understanding the purpose of the relationship, and assigning a risk rating. Based on that rating, operators apply simplified due diligence (SDD) to genuinely low-risk cases, standard CDD to most, and enhanced due diligence (EDD) to high-risk customers, high-value activity, and PEPs. CDD is not one-off: it includes ongoing monitoring of transactions and behaviour throughout the relationship. It sits at the centre of FATF Recommendation 10 and is a legal obligation, not a formality.
The core CDD steps are: identify the customer, verify identity from reliable/independent data, identify any beneficial owner, understand the purpose of the relationship, and assess and record a risk rating.
SDD (simplified) applies only where risk is demonstrably low; it means less intensive measures such as verifying later or monitoring less frequently, never skipping CDD altogether.
EDD (enhanced) applies to higher-risk situations, PEPs, unusually large or complex transactions, and higher-risk jurisdictions, and adds source-of-funds/source-of-wealth checks, deeper background research, and senior-management involvement.
CDD is risk-based and dynamic: the risk rating must be reviewed and CDD refreshed as behaviour, spend, or circumstances change (ongoing monitoring).
PEPs and customers on sanctions/high-risk lists can never be given simplified due diligence.
Failing to complete required CDD generally means the operator should not proceed with (or must suspend) the transaction or relationship.
For casinos and remote gambling operators, FATF and national rules pull the sector into the regulated regime as designated non-financial businesses (FATF Recommendation 22), so operators must apply CDD at defined trigger points rather than only when customers 'look' risky. In the UK the Money Laundering Regulations 2017 require casinos to apply CDD to any transaction of €2,000 or more (a threshold being converted to £2,000), covering both stakes and collection of winnings, and the Gambling Commission expects escalation to EDD for higher-spend or higher-risk players.
Reference, not advice. This is a teaching summary of the AML framework — not legal advice, and not an operational compliance procedure. Confirm requirements against the primary regulator and your own counsel.