Most attention in this subject goes to the enhanced end, which leaves the other two levels underspecified in a lot of policies. That is a mistake, because the majority of any book sits at standard and a meaningful slice may qualify for less. This page is about the lower levels: what they collect, what has to be true before you apply them, and what does not get reduced.
Simplified is a reduction, not an exemption
Where a customer type genuinely presents lower risk, some regimes allow a reduced evidence set. What is never reduced is the requirement to have decided that this customer qualifies, on stated grounds, and to be able to show it. In practice simplified due diligence produces a shorter file with the same skeleton: identified, rated, reasoned, dated. A firm that treats simplified as a category where nothing is recorded has not applied a lower level, it has skipped the work.
Standard is where the book actually lives
The standard level should be written with the most care because it is applied the most often. It is worth being specific about exactly what is collected, what verification is acceptable, and what the review interval is, because those three decisions multiply across thousands of files. Vagueness here is expensive in a way vagueness at the enhanced end is not, since the enhanced files get individual attention and the standard ones get whatever the policy says.
Account due diligence and the relationship view
Some firms talk about account due diligence rather than customer due diligence, usually because their systems are organised around accounts. It is worth resisting: a customer with three accounts should not have three unrelated diligence records, because the risk attaches to the customer and so does the review. Where the underlying systems are account-based, the file should still roll up to the customer, or you will review the same person three times and still miss the change that mattered.
Questions people ask about simplified due diligence
When can we apply simplified due diligence?
Only where your own policy says a customer type qualifies and can explain why, and only where the rules that reach your firm allow it. It is a decision to record, not a shortcut to take.
What is the difference between standard and enhanced?
Standard establishes who the customer is. Enhanced also establishes where the wealth and funds come from, adds an approval and shortens the review interval.
Should simplified files still have a review date?
Yes. A longer interval is reasonable; no interval is not, because a customer that qualified for a reduced level three years ago may not qualify today and nothing will tell you unless somebody looks.