# Simplified due diligence (SDD)

**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

- [Customer due diligence (CDD)](/glossary/customer-due-diligence/)
- [Enhanced due diligence (EDD)](/glossary/enhanced-due-diligence/)
- [Risk-based approach](/glossary/risk-based-approach/)

Canonical: https://proofvolt.eu/glossary/simplified-due-diligence/