Customer Due Diligence Services
Customer Due Diligence Services
Just as employers would do a background check on a prospective employee before hiring them, financial institutions need to thoroughly vet their customers to mitigate fraud and money laundering risk. This process is known as Customer Due Diligence (CDD). The CDD process involves verifying a customer’s identity, creating a risk assessment profile, and determining whether the customer is considered high risk and requires enhanced due diligence (EDD) or simplified due diligence (SDD). It’s important to note that this is not a one-time procedure – it should be conducted on an ongoing basis. Any significant changes in a customer’s circumstances or behavior should trigger a new round of CDD to ensure compliance with laws and regulations against financial fraud, money laundering, sanctions busting, and terrorist financing.
Customer Due Diligence Services: Strengthening Compliance and Security
While implementing and maintaining Customer Due Diligence Services is time-consuming and expensive, it’s far less costly than the heavy fines that financial institutions face for non-compliance with KYC and AML rules. A good way to reduce the amount of manual work that needs to be done is by using a software solution that automates in-depth checks and helps keep files organized.
Fraud costs businesses more than $5 trillion worldwide each year. That’s why it’s essential to comply with AML/KYC and CDD regulations. With criminals getting more creative in disguising their ill-gotten gains, it’s even more crucial for companies to perform the necessary due diligence on potential and existing customers. This prevents fraudulent activity from going unnoticed and allows regulators to proactively detect and report suspicious activities to law enforcement.