What is Customer Due Diligence?

Customer Due Diligence (CDD) is the control procedures that companies apply while making risk assessment to their customers. Customer due diligence, one of the basic requirements of the risk-based AML approach, provides the detection of potential customer risks. Some of the risks firms face are money laundering, terrorist financing, and other financial crimes. CDD procedures have to be applied by organizations under AML liability. Companies that do not implement CDD procedures may face AML penalties. Also, Customer Due Diligence is the core component of Anti Money Laundering (AML).

CDD requires knowing the customer and knowing their activities. It is a background check process in accordance with the legislation. With the implementation of CDD procedures it is aimed for financial institutions to detect financial crime risks and protect themselves from financial crimes.

Why Is CDD Necessary?

  • To detect customer risks
  • To comply with the requirements of the relevant legislation and regulations
  • Providing the requested products or services
  • To prevent money laundering and terrorism financing
  • For easier detection of unusual situations to help identify and analyze unusual events and situations during the organization's relationship with other companies;

There are many reasons, such as these.

What Is The CDD process?

  • First, information about the customer is collected with the basic Customer Due Diligence. (Fullname, contact information, place of birth and date of birth, nationality, marital status, etc.)
  • In case of doubt, scanning is performed to authenticate.
  • Customer activities are examined.
  • Enhanced Due Diligence is needed for higher-risk customers.
  • The ongoing Check process continues as customer profiles may change.

When CDD Is Required?

Performing customer due diligence (CDD) is one of the most crucial components of any AML/CFT regulations. Financial Institutions are required to verify their clients in order to avoid financial crime risks. It is very important to apply the CDD process in new business relationships. After checking the person you are going to have a business relationship with, you should start the business relationship. This eliminates potential risks. In addition, CDD checks should be performed in case of suspicious transactions.

Do you meet CDD obligations in customer account opening processes? - Case Study

Enhanced Due Diligence

Some customers or business partnerships pose more financial crime threats for companies. EDD is the KYC process that enables higher-risk individuals or companies to be examined. Companies take higher measures than customer due diligence during the enhanced due diligence process. Political Exposed Persons have a high level of risk due to the risk of corruption.

Consequently, Customer Due Diligence processes have become an essential requirement for organizations to protect their business. As factors such as high-risk profiles or criminal threats develop, CDD's financial institutions' approaches should be innovative.Qualified specialists should be included in the process to avoid wasting time and resources.

Sanction Scanner allows you to take CDD, EDD, and KYC measures. With our next-generation sanction, pep, and adverse media screening tool, you can comply with AML-CTF regulations. Immediately reduce risks and protect yourself from financial crimes.

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