Banking
Customer due diligence
Also known as CDD
Customer due diligence is the requirement that financial institutions identify their customers, understand the nature of the customer's business, and identify beneficial owners holding 25% or more of a legal entity. Enhanced due diligence applies to higher-risk customers.
In plain terms: The bank's obligation to understand who you are and what your business does.
Why it matters
The 25% beneficial ownership threshold is why banks ask about every owner above that level, not just the person applying. Cap tables that are unclear or held through other entities slow this down considerably.
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Source: FinCEN — CDD Final Rule. This is a definition, not tax or legal advice — verify against the primary source before acting.