Customer due diligence is a comprehensive, systematic investigation process undertaken by organizations to assess the economic, legal, fiscal and financial circumstances with a business relationship or transaction and as needed, mitigate any potential associated risks. Typically, this can be via an  examination, audit or review in order to verify information. 

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From a Know Your Customer (KYC) standpoint, due diligence is an investigation into an individual or entity during the preparation of entering a business relationship - in order to uncover or confirm details about the counterparty. From a financial perspective, due diligence requires an investigation of financial records prior to advancing into any proposed transactions with another party. 

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Typical due diligence processes involve a thorough review and verification of various aspects of the counterparty may include things like confirming company registry filings, ID information, adverse media, source of funds, ownership structure and more. Additionally, it would involve looking into whether they are sanctioned, there are any litigation proceedings, potential links to economic crimes like corruption and tax evasion and similar.

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Sometimes, customer due diligence can also be referred to as simply due diligence (DD).

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For higher-risk customers or transactions - or those operating in particularly high risk jurisdictions, Enhanced Due Diligence (EDD) may be required. 

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What a company considers to be CDD versus EDD depends on their own in-house policies and processes.