Customer and enhanced due diligence (CDD/EDD)

Customer due diligence (CDD)

Customer due diligence is the process banks use to understand who they are doing business with. Under FinCEN's CDD rule, which took effect in 2018, banks must:

• Identify and verify each customer.
• Identify and verify the beneficial owners of business customers.
• Understand the nature and purpose of the customer relationship.
• Monitor accounts on an ongoing basis and keep customer information current.

Know your customer (KYC) refers to the identity-verification part of this process.

Enhanced due diligence (EDD)

Enhanced due diligence is additional review for customers a bank considers higher risk. Cannabis businesses almost always receive EDD because marijuana remains federally controlled and many operators handle large amounts of cash. EDD can include:

• Verifying state licenses and checking their status regularly.
• Reviewing operating agreements, financial statements and tax filings.
• Site visits.
• Comparing deposits with point-of-sale and seed-to-sale data.
• More frequent account reviews.

FinCEN's 2014 marijuana guidance describes many of these steps.

What operators can do

• Keep a current document package: licenses, ownership records, organizational documents, tax IDs and recent financial statements.
• Tell your bank about ownership, license or location changes before they happen when possible.
• Keep books reconciled so you can explain activity quickly.

How Safe Harbor helps

Safe Harbor's onboarding is built around cannabis due diligence, and a dedicated specialist walks each business through it. Start an application or see our back-office support for help keeping records ready.

Related terms

Beneficial ownership · Bank Secrecy Act · Full glossary

This page is for general information only and is not legal advice. Last reviewed November 2026.