Customer due diligence (CDD)

What is CDD?

Customer due diligence (CDD) is the process of a company understanding and identifying the legitimacy and characteristics of its potential customers.

CDD and KYC(Know Your Customer) are the cornerstones of any AML (Anti Money Laundering) policy developed by a company, and they revolve around the need to verify the identity of the customers with whom those companies affected by AML regulations work.

In simple terms, Know Your Customer (KYC) is about demonstrating Customer Due Diligence (CDD), i.e., verifying a customer’s identity, so it is difficult to distinguish between KYC and CDD as the latter is an integral part of the former.

What CDD procedure consists of:

The CDD procedure generally consists of the following steps:

– Liveness/Video Checks: Verifying the identity of the customer through real-time video interactions to ensure they are present and genuine.

– Document Verification: Reviewing and validating identification documents to confirm their authenticity.

– Sanctions Lists: Screening customers against sanctions lists to identify any potential legal or regulatory issues.

– Digital Footprint Analysis: Evaluating the online behaviour and presence of the customer to assess their credibility.

– Analysis of Public and Private Data Sources: Utilising a variety of publicly available and proprietary data sources to gather comprehensive information about the customer.

These steps help companies mitigate risks and comply with legal requirements while ensuring a safe and secure environment for their operations.