What Is CDD In Banking?

What is CDD in KYC process?

Customer Due Diligence (CDD) or Know Your Customer (KYC) policies are the cornerstones of an effective AML/CTF program.

Put simply, they are the act of performing background checks on the customer to ensure that they are properly risk assessed before being onboarded..

What are the types of CDD?

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

How do you conduct CDD?

CDD is the process where pertinent information of a customer’s profile is collected and evaluated for potential money laundering or terrorist financing risks. Upon completion of CDD, the customer may be given a risk rating in accordance with the risk he or she may present to the company.

What does a CDD analyst do?

A CDD analyst ensures that all required checks are made to prevent you from running unnecessary risks. If you omit to do these checks, you run the risk of hefty fines and reputational damage, as tackling money laundering and terrorist financing are high on the political agenda nowadays (Wwft).

What is KYC checklist?

A basic KYC Checklist will include: Company trading name. Address. Status. Company Number. VAT/GST Number.

When should CDD be carried out?

You must carry out customer due diligence measures when your business carries out occasional transactions. These are transactions that are not carried out within an ongoing business relationship where the value is: €15,000 or more if you’re not a high value dealer (or the equivalent in other currencies)

What are the four pillars of AML?

For many years AML compliance programs were built on the four internationally known pillars: development of internal policies, procedures and controls, designation of a AML (BSA) officer responsible for the program, relevant training of employees and independent testing.

What are the 3 stages of money laundering?

The process of laundering money typically involves three steps: placement, layering, and integration.Placement puts the “dirty money” into the legitimate financial system.Layering conceals the source of the money through a series of transactions and bookkeeping tricks.More items…•

What is standard due diligence?

In the majority of cases, standard due diligence is the level of due diligence that will be used. These are generally situations where there is a potential risk but it is unlikely that these risks will be realised. Standard due diligence requires you to identify your customer as well as verify their identity.

What does CDD mean in banking?

Customer Due Diligence1. 05/05/2018. Customer Due Diligence — Overview. Objective. Assess the bank’s compliance with the regulatory requirements for customer due diligence (CDD).

What is CDD and EDD in banking?

The second step is Customer Due Diligence (“CDD”) which requires the bank to obtain information to verify the customer’s identity and assess the risk. … If the CDD inquiry leads to a high risk determination, the bank has to conduct an Enhanced Due Diligence (“EDD”).

What are CDD requirements?

The CDD Rule requires that financial institutions maintain “appropriate risk-based procedures for conducting ongoing customer due diligence,” including “[u]nderstanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile” and “[c]onducting ongoing monitoring to …

What is simplified CDD?

Simplified due diligence is the lowest level of due diligence that can be completed on a customer. … Often customers that are required to disclose information regarding their ownership structure and business activities or companies that are subject to the Money Laundering Regulations are seen to be a lower risk.

What is the difference between KYC and CDD?

What’s the difference between KYC and CDD? CDD (Customer Due Diligence) is the process of a business verifying the identity of its clients and assessing the potential risks to the business relationship. KYC is about demonstrating that you have done your CDD.

What are the three 3 components of KYC?

There are three components of KYC compliance.The first pillar of a KYC compliance policy is the customer identification program (CIP). … The second pillar of KYC compliance policy is customer due diligence (CDD). … The third pillar of KYC policy is continuous monitoring.More items…•

What is the KYC process?

KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC check is the mandatory process of identifying and verifying the identity of the client when opening an account and periodically over time. In other words, banks must make sure that their clients are genuinely who they claim to be.

What is a CDD check?

Customer due diligence (CDD) is a process of checks to help identify your client and make sure they are who they say they are. You’re in a better position to identify potential money laundering if you know your client and understand the reasoning behind the instructions they give you.

Why is CDD so important?

And why is it so important? CDD is a critical element of effectively managing risk and protecting you, and your business, against potential association or involvement with financial crimes and nefarious activities. … Customer risk assessments can be used to determine which level of due diligence is required.

Who is beneficial owner in KYC?

The term “beneficial owner” has been defined as the natural person who ultimately owns or controls a client and/or the person on whose behalf the transaction is being conducted, and includes a person who exercises ultimate effective control over a juridical person.

What is difference between AML and KYC?

The difference between AML and KYC is that AML (anti-money laundering) is an umbrella term for the range of regulatory processes firms must have in place, whereas KYC (Know Your Customer) is a component part of AML that consists of firms verifying their customers’ identity.

What is screening in KYC?

“Name screening refers to the process of determining whether any of the bank’s existing or potential customers are part of any blacklists or regulatory lists”. … Name screening is used to identify such individuals also.