How is Customer Due Diligence (CDD) performed?

Measures should be risk-based. Companies need to understand the risk posed by their clients and adjust their due diligence scrutiny accordingly.<br/><br/>

The majority of clients will be subject to standard <a href="/glossarycollection/customer-due-diligence" style="color:#48277C;" target="_blank" title="Customer Due Diligence"><u>CDD </u></a> measures which require identity, verification and business relationship checks.<br/><br/>

In lower risk scenarios, Simplified Due Diligence (<a href="/glossarycollection/simplified-due-diligence" style="color:#48277C;" target="_blank" title="Simplified Due Diligence"><u>SDD</u></a>) may be appropriate. [This still requires checking to a threshold whereby an institution can confirm SDD is appropriate e.g a listing on a reputable stock exchange].<br/><br/>

Conversely, in some circumstance CDD may not be enough as the client poses a higher risk to your business. In these cases, Enhanced Due Diligence (EDD) may have to be performed so as to gain a deeper understanding of the client.<br/><br/>

CDD will require institutions to establish the identity and activities of potential customers before entering into a business relationship with them to screen for bad actors early on. The customer's risk-type will need to be categorised and stored in a digitally secure location where it can be accessed for ongoing future checks. In some cases, the institution will not be able to satisfy itself that a client's profile is within its own risk appetite and will decide not to proceed.<br/><br/>

Individual validation checks will include: name; address; date of birth which can be confirmed using resources such as the electoral register, passports and driving licences.<br/><br/>

Company checks will include: verification of the registration number; registered and operating addresses; signatories; Director details; and, beneficial owners.<br/><br/>