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What is Customer Due Diligence (CDD)?

What is CDD?

Customer Due Diligence (CDD) is the process of identifying and verifying who your clients are before you provide a designated service. For real estate agents, the designated service is brokering the purchase, sale, or transfer of property for another person.

The goal of CDD is to ensure you know who you are dealing with — and to detect situations where a client or transaction may pose a money laundering or terrorism financing risk.

When is CDD required?

You must complete CDD before providing your designated service. In practice, this means verifying the identity of buyers and sellers before you start working on a transaction — not after the sale is complete.

You must also update CDD throughout the business relationship if the client’s circumstances or risk profile change.

Standard CDD vs enhanced CDD

Standard CDD applies to most clients. You need to:

  • Collect their full legal name, date of birth, and residential address
  • Verify their identity using a reliable and independent method (e.g. a photo ID document inspected in person, a video call, or electronic verification via the Document Verification Service)
  • Record who verified the identity, when, and by what method

Enhanced CDD (ECDD) applies when a client or transaction presents elevated risk. Triggers include:

  • The client is a foreign Politically Exposed Person (PEP)
  • The client is from a high-risk jurisdiction (FATF grey or black list)
  • The transaction involves complex ownership structures
  • Your risk assessment rates the client as high risk

Enhanced CDD requires additional measures: senior management approval for the relationship, source of funds verification, and closer ongoing monitoring.

What AML Simple records

When you complete CDD for a client in AML Simple, the platform records:

  • Client identity details (name, DOB, address)
  • The identity document type, number, and issuer
  • The verification method used and who performed it
  • The date of verification
  • The client’s assigned risk rating

All records are retained for 7 years to meet AUSTRAC’s record-keeping requirements.

CDD is a workflow tool — you are responsible for making the final judgments about each client’s identity and risk.