Simplified Due Diligence

Simplified Due Diligence


The Regulations provide that for certain types of clients assessed to be lower risk for money laundering purposes, a simplified due diligence process can be applied.

On the other hand, certain categories of client are considered higher risk and requirements to undertake enhanced due diligence and enhanced ongoing monitoring are imposed.

Previously, simplified due diligence could be applied to

  • credit or financial institutions subject to the requirements of the Money Laundering Directive or similarly compliant local legislation
  • companies whose securities are listed on a regulated market subject to specified disclosure obligations
  • UK public authorities
  • UK pension schemes

From 2017, this exemption from enhanced CDD is not automatic. Organisations can only use these circumstances as one part of a justification for simplified CDD, and that decision must be backed up by evidence.

A risk-based approach is at the very core of the Regulations. This approach is meant to help the organisation systematically avoid being involved in any financial crime. To do so, we must carry out appropriate and risk sensitive client due diligence measures on all clients.

Simplified due diligence evidence required

Documentary evidence from prospective and actual clients, along with information from other sources obtained when undertaking client due diligence, form an essential record of the steps we have taken as an organisation to comply with our anti-money laundering obligations. Such records may be subject to inspection by the regulatory authority.

Failure to comply with these regulatory CDD requirements can amount to an offence under the Money Laundering Regulations, irrespective of whether any money laundering has taken place.