Customer Due Diligence (CDD) is a company's control procedure while assessing risk. CDD check, one of the basic requirements of the risk-based AML approach, detects potential customers' 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 screening may face penalties. It requires knowing the customers and knowing their activities. Implementing procedures is aimed at financial institutions to detect 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 extraordinary events and conditions 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 CDD. (Full name, contact information, place of birth and date of birth, nationality, marital status, etc.)
- In case of doubt, scanning is performed to authenticate.
- Customers' activities are examined.
- Enhanced Due Diligence is needed for higher-risk customers.
- The ongoing CDD Checks process continues as customer profiles may change.
When Is CDD Required?
Performing a customer due diligence check is one of the most crucial components of any regulation. Financial Institutions are required to verify their clients to avoid financial crime risks. Therefore, applying the anti-money laundering CDD process in new business relationships is essential. After checking the person you will have a business relationship with, you should start the business relationship. This eliminates potential risks. Also, it should be performed in case of suspicious transactions.
Some customers or business partnerships pose more financial crime threats for companies. Enhanced Due Diligence (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, CDD screening has become an essential requirement for organizations to protect their business. As factors such as high-risk profiles or criminal threats develop, Client Due Diligence's financial institutions' approaches should be innovative. Qualified specialists should be included to avoid wasting time and resources.
Sanction Scanner allows you to take CDD, EDD, and KYC measures. With the CDD Software solution, you can easily perform customer screening. With our next-generation sanction, pep, and adverse media screening tool, you can comply with AML-CTF regulations. As a result, immediately reduce risks and protect yourself from financial crimes.