What is Simplified Due Diligence?
The accepted definition of Simplified Due Diligence (abbreviated as SDD, due diligence or due diligence analysis) indicates that it is a simplified level of customer due diligence verification.
SDD represents a lower level of due diligence – preceding standard Due Diligence (most often used for low- and medium-risk clients) and Enhanced Due Diligence – enhanced due diligence, used for high-risk clients.
SDD meaning in banking – what is its importance?
SDD is the most basic type of Customer Due Diligence. It is applied to individual customers and businesses with zero or low risk of money laundering after initial verification. SDD meaning in banking applies to low-value transactions that are unlikely to be used for illegal purposes, using a low-risk payment method, and against publicly traded companies subject to regulatory oversight or government entities.
SDD is used in circumstances such as:
- investment in a company,
- merger or acquisition,
- sale of a company,
- acquisition of an outside investor,
- sale of shares or stocks,
- merger of capital companies,
- or restructuring.
SDD in AML (Anti Money Laundering) – what are the requirements?
Simplified Due Diligence (SDD) is a term commonly used for Anti Money Laundering (AML). Simplified due diligence, conducted using tools such as AML platform, involves thoroughly examining entities or transactions to identify and minimize risk, ensure compliance, and make sound business decisions.
Simplified Due Diligence uses simplified procedures for customer identification and verification (KYC – Simplified Customer Due Diligence). Despite its simplified form, the investigation should be characterized by due diligence and unbiased assessment and serve the customer’s interests.