{"id":29299,"date":"2024-04-10T16:36:15","date_gmt":"2024-04-10T13:36:15","guid":{"rendered":"https:\/\/www.au10tix.com\/customer-due-diligence-cdd-2\/"},"modified":"2024-06-14T18:16:05","modified_gmt":"2024-06-14T15:16:05","slug":"customer-due-diligence-cdd-2","status":"publish","type":"post","link":"https:\/\/www.au10tix.com\/blog\/customer-due-diligence-cdd-2\/","title":{"rendered":"What is Customer Due Diligence (CDD)? Ultimate Guide"},"content":{"rendered":"\t\t
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Truth be told, your go-to financial institution, aka, your neighborhood bank, can never have enough information about\u2026 you<\/em>, their loyal customer. In fact, your bank\u2019s fundamental job is not only to serve you, it\u2019s also to protect you, and your assets \u2013 deposits, stocks, bonds, currencies, and a long list of other valuable personal or business investments. With the surge in money laundering schemes, cybersecurity breaches, and credentials and credit card theft, your financial institution, and other organizations, are going the extra mile to maintain regulatory compliance and safeguard their customers from irreparable damage, and potential financial ruin. And they consistently stay \u2018in check\u2019 by collecting, analyzing, and processing reams of customer data.<\/p>

Financial institutions must establish that their customers are not involved in any illegal activities to protect themselves. In other words, to confirm that customers identification program<\/a> are exactly who they claim to be, be it reputable business owners, recognized company shareholders, or are gainfully employed by a legitimate organization. All of these checks and balances are to rule out any potential risks of customers being involved in financial crimes, such as money laundering, drug cartels, or illicit gambling operations.<\/p>

Welcome to the world of Customer Due Diligence, commonly referred to as CDD. It\u2019s the stringent process financial institutions, businesses, and other organizations use to gather information about their customers, to identify and mitigate potential financial risks, flag them, and in word, \u2018catch a thief,\u2019 red-handed. The CDD process is not an ominous as seems, and it has strict rules and regulations of its own. Let\u2019s deep dive into what you need to know about CDD, and how, when in place, it can make or break a customer, and take down their illegal financial activity.<\/p>

What is Customer Due Diligence (CDD)? <\/strong><\/h2>

As its name suggests, Customer Due Diligence is all about the customer, or in lay terms, being \u2018diligent,\u2019 about an individual by investigating and authenticating information with regard to their identity, and financial and business activities. Typically, collecting and verifying information about a \u00a0customer identification program<\/a> is performed when establishing a business relationship, prior to the onboarding process, and can include the customer\u2019s name, address, and other personal data. Take, for example, a bank that may require verifying a customer\u2019s passport before allowing them to open an account and make a deposit. Equally important, CDD also involves continuous monitoring of these activities, to detect changes or red flags that might indicate an increased risk of illicit activity.<\/p>

CDD is also an integral part of a financial institution or organization\u2019s risk management. Typically, these are strategies that dictate how these organizations intend to assess, respond to, and monitor risk. The CDD process effectively acts as a catalyst, by making the perception of \u2018risk\u2019 transparent to the organization, where its findings are routinely used in making both investment and operational decisions. CDD is required by various laws and regulations, including the AML<\/a>, (Anti-Money Laundering) Act, and KYC<\/a>, (Know Your Customer), the AML best practice for financial institutions to verify customers\u2019 identities, and assess their risk profile.<\/p>\t\t

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