Category: Compliance & AML · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026
The lighter-touch CDD measure permitted under MLR 2017 where, applying a risk-based approach, the firm assesses the business relationship or transaction as presenting a low risk of money laundering or terrorist financing.
Simplified Due Diligence (SDD) is a reduced form of Customer Due Diligence permitted by the MLR 2017 for customers and transactions that, on a risk-based assessment, present low risk. SDD does not mean “no CDD” — it means the firm may adjust the timing, extent or method of identification and verification, while still meeting the fundamental MLR objectives.
MLR 2017, regulation 37 (simplified customer due diligence). JMLSG Guidance Part I, chapter 5 expands on practical SDD application.
Before applying SDD the firm must conduct a documented risk assessment of the relationship or transaction. Factors that may suggest lower risk include: (a) customer factors such as publicly listed companies, public authorities, or other regulated financial sector firms; (b) product factors such as financial products with limited functionality or low value; (c) geographic factors such as established UK or EEA jurisdictions; (d) channel factors such as face-to-face interaction with adequate identity controls. SDD permits the firm to (e.g.) verify on receipt of the first premium rather than upfront, or to rely on adequate alternative documentation.
SDD is not available for higher-risk situations under regulation 33 (Enhanced Due Diligence triggers). It is also not available where the firm has suspicion. SDD must always be backed by documented risk-based reasoning.
Applying SDD to a UK-listed plc commercial customer with publicly available beneficial ownership disclosure may take the form of relying on the listed register and Companies House without further independent verification of directors at lower risk levels — though the firm retains the duty to keep the relationship under ongoing monitoring.
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), regulation 37. JMLSG Guidance Part I.
By Matt Bartlett, Director, on 2026-06-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
Get a quote