{"id":27055,"date":"2025-08-19T09:23:55","date_gmt":"2025-08-19T08:23:55","guid":{"rendered":"https:\/\/figsflow.com\/uk\/?p=27055"},"modified":"2025-12-16T11:56:32","modified_gmt":"2025-12-16T10:56:32","slug":"what-are-cdd-edd-why-do-bookkeepers-need-them","status":"publish","type":"post","link":"https:\/\/figsflow.com\/uk\/what-are-cdd-edd-why-do-bookkeepers-need-them\/","title":{"rendered":"What Are CDD & EDD & Why Do Bookkeepers Need Them\u00a0"},"content":{"rendered":"\t\t
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In 2023 alone, UK financial services paid over \u00a3400 million in anti-money laundering fines. Most of it was handed to legitimate firms that just failed to maintain proper records or conduct basic AML checks like CDD and EDD on their clients.\u00a0<\/span>\u00a0<\/span><\/p>

If you want to avoid becoming another compliance casualty like these firms and protect your bookkeeping practice, read this blog.\u00a0<\/span>\u00a0<\/span><\/p>

In this blog post, we’ll walk you through Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) and show you exactly what you need to do to stay compliant. Plus, we’ve a surprise at the end that can help you streamline CDD and EDD without any hassle.\u00a0<\/span>\u00a0<\/span><\/p>

Sounds good! Let’s start with the basic understanding of CDD and EDD.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Understanding CDD & EDD: The Fundamentals <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Customer Due Diligence (CDD) <\/span>represents<\/span> the standard level of background checks and ongoing monitoring you must perform before taking on new clients or providing regulated services. <\/span>Enhanced Due Diligence (EDD) takes this same process of identity checks further<\/span> and requires<\/span> more thorough verification and ongoing <\/span>scrutiny<\/span>.\u00a0<\/span><\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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For example:\u00a0<\/strong><\/p>

\u00a0<\/span>Consider you, as a bookkeeper, are onboarding two potential clients: a local restaurant owner seeking basic bookkeeping services, and an offshore property investment company seeking company formation services.<\/span>\u00a0<\/span><\/p>

\u00a0<\/span>Restaurant owner here is a low-risk client, and you need to perform standard CDD. It includes checking photo identification, verifying business registration documents, understanding their revenue sources, and conducting basic background searches.\u00a0<\/span>\u00a0<\/span><\/p>

\u00a0<\/span>An offshore company is a medium to high-risk client, and you need to perform EDD. It includes a detailed investigation of beneficial ownership, enhanced background checks on all directors, ongoing transaction monitoring, regular business relationship reviews, and additional documentation regarding funding sources and business purpose.\u00a0<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Legal Obligations for UK Bookkeepers <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 govern <\/span>anti-money <\/span><\/a>laundering requirements<\/a> in the UK<\/span>, and HM Revenue and Customs (HMRC) serves as the primary supervisory authority for accounting practices.<\/span>\u00a0<\/span><\/p>

These regulations place specific legal obligations on accountants, bookkeepers and tax advisers who provide regulated services such as company formation, acting as a company secretary, trust services, or handle client money transactions.<\/span>\u00a0<\/span><\/p>

Your key obligations under these regulations are:\u00a0<\/span>\u00a0<\/span><\/p>