What is Customer Due Diligence (CDD)? | Swift (2024)

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What is Customer Due Diligence (CDD)? | Swift? ›

What is Customer Due Diligence (CDD)? In the world of Financial Crime Compliance (FCC), customer due diligence (CDD) is an important and complex field. Customer due diligence is the processes used by financial institutions to collect and evaluate relevant information about a customer or potential customer.

What is the customer due diligence process? The customer due diligence (CDD) process involves gathering and verifying information about a customer and ongoing risk assessment and management to help organisations fulfil their legal and regulatory obligations and protect themselves from financial crime.

The CCD process is typically conducted as a business is establishing a relationship with a client – a process known as “onboarding”. When conducting CCD checks, a business will typically be verifying: That an individual exists. Whether that individual is exactly who they claim to be.

Customer due diligence (CDD) is the act of performing background checks and other screening on the customer to ensure that they are properly risk-assessed before being onboarded. CDD is at the heart of Anti-Money Laundering (AML) and Know Your Customer (KYC) initiatives.

Customer Due Diligence (CDD) is the process of verifying a customer's identity and performing a risk assessment of conducting business with this individual or business.

Customer Due Diligence (CDD) is the process of collecting and verifying information about a customer during onboarding. This includes the customer's name, address, and other personal data. Businesses must carry out CDD when establishing a business relationship.

Customer identification and verification. Understanding the nature and purpose of the business-customer relationship. Beneficial ownership identification and verification. Ongoing monitoring for suspicious activities.

The CDD Rule has four core requirements. It requires covered financial institutions to establish and maintain written policies and procedures that are reasonably designed to: identify and verify the identity of customers. identify and verify the identity of the beneficial owners of companies opening accounts.

There are three levels of customer due diligence: standard, simplified, and enhanced.

The CDD process helps banks understand and manage their entire client risk base, and prevent financial crimes like money laundering and fraud. CDD is a process used to verify a person's identity - usually through documentation or data checks - and to assess any risk associated with them.

What is a CDD checklist? ›

Customer due diligence (CDD) is a process of checks to help identify your client and make sure they are who they say they are.

Establishing a business relationship: Ahead of a new customer-business relationship, banks must perform due diligence to check the customer's risk profile, verify who they are and ensure they aren't using a fake identity.

The primary purpose of CDD is to help businesses establish their customers are not involved in illegal activity and are who they say they are. CDD aims to prevent organised financial crime, including money laundering and terrorist funding, and associated crime like money muling and drug cartels.

Basic customer due diligence involves collecting information about: the identity of a customer – from their company address to the names of their individual executives. the activities a customer is engaged in and markets in which they operate. the other entities with which a customer does business.

Customer Due Diligence Example: An example of Customer Due Diligence would be a bank requiring a customer to provide a government-issued identification document (such as a passport or driver's license), proof of address, and additional documentation for businesses, like incorporation certificates and financial ...

The objective of CDD is to enable the bank to understand the nature and purpose of customer relationships, which may include understanding the types of transactions in which a customer is likely to engage. These processes assist the bank in determining when transactions are potentially suspicious.

Customer due diligence (CDD) is a series of checks that helps organizations assess and verify the identity of their customers. It aims to mitigate risks associated with money laundering, terrorism financing, fraud, and sanctions busting.

KYC is the initial step, where businesses verify the identity of their customers. CDD, on the other hand, is an ongoing process that involves continuously monitoring customer behavior and assessing risks associated with it. Both are pivotal in preventing financial crimes. Let us discuss these in more detail.