The abbreviation KYC stands for ‘Know Your Customer’ and CDD stands for ‘Customer Due Diligence.’ CDD encompasses the policy in which organizations are informed in great detail about the companies they work with or do business with.
It is not only important for organizations themselves that they comply with the laws and regulations. Of course, this obligation also applies to (potential) customers. To prevent reputational damage, it is therefore wise to screen customers extensively in advance.
The measures for KYC are laid down in both national and European legislation. For (financial) institutions, this in-depth knowledge of the customer is crucial to exclude the possible risks of fraud and crime. In fact, they are obliged to formulate and implement a good KYC/CDD policy.