How do you apply a risk-based approach in CDD?
Upon customer risk Assessment, a business can classify its clients into high-risk customers, medium-risk customers and low-risk customers. Adopting a risk-based approach in Customer Due Diligence (CDD) means tuning the gravity of due diligence measures based on the customer’s risk profile.
Hence, for a high-risk customer, businesses must perform an Enhanced Due Diligence (EDD). For a medium-risk customer, businesses can perform Standard CDD, while, for a low-risk customer, businesses can either go for a Simplified CDD or Standard CDD.
Learn more about implementing risk-based approach in AML compliance with this article on