Simplified due diligence (SDD)
Checked against the official texts on .
Simplified due diligence (SDD) is a reduced set of customer due diligence measures that a regulated firm may apply where a business relationship or transaction presents a demonstrably low risk of money laundering or terrorist financing. SDD reduces the extent, timing or frequency of checks; it never removes the duty to detect unusual or suspicious activity.
Also called: simplified CDD.
Why it matters for PSPs and EMIs
Low-value and low-risk payment products depend on SDD to stay usable. The trade-off is documentation: a firm that applies SDD must be able to show why the risk is low, and must stop applying SDD as soon as that is no longer true.
What the law says
What SDD may involve. AMLR Art. 33(1): verifying identity after the relationship is established (at the latest within 60 days, where the lower risk justifies it); reducing the frequency of customer information updates; reducing the information collected on the purpose of the relationship; reducing the frequency or degree of transaction scrutiny; and other measures AMLA identifies under Art. 28.
Documented and reviewed. AMLR Art. 33(2) to (4): specific measures in the firm's internal procedures, documented decisions, risk limits while verification is pending, and regular checks that the conditions still exist.
When SDD is not allowed. AMLR Art. 33(5): doubts about the information or inconsistencies in it; lower-risk factors no longer present; monitoring that excludes a lower-risk scenario; suspicion of money laundering or terrorist financing; or suspected sanctions evasion.
Lower-risk factors. AMLR Annex II.
E-money exemption. AMLR Art. 19(7): supervisors may exempt certain e-money products from some CDD measures where all conditions are met, including a non-reloadable instrument holding no more than EUR 150.
Detail to come. AMLR Art. 28(1)(b): AMLA regulatory technical standards on the types of SDD measures.
Until 10 July 2027. Directive (EU) 2015/849, Arts. 15 to 17, as transposed nationally.
How ProofVolt handles it
In ProofVolt, a risk never disappears: no later document, round or AI output can quietly clear it.
Related
Sources
Informational only, not legal advice.