Simplified Due Diligence (SDD) is a concept in anti-money laundering (AML) and know your customer (KYC) regulations. It allows financial institutions to apply reduced customer due diligence requirements to lower-risk customers or transactions. SDD is typically applied when there is a low risk of money laundering or terrorist financing. However, it is essential for institutions to assess and classify customers accurately to determine if SDD can be applied without compromising compliance standards.