Customer Due Diligence (CDD) is a key part of the anti-money laundering requirements. They ensure that businesses know who their clients are, what their clients business are and do. They help ensure that you do not accept clients unknowingly which are outside your normal risk tolerance, or whose business you will not understand with sufficient clarity to be able to form money laundering suspicions where appropriate. If businesses do not understand its client’s regular business pattern of activity it would be very difficult to identify any abnormal or suspicious activity.
The 2007 Regulations provide an outline of the required components of CDD which is undertaken on a risk sensitive basis. Regulated firms need to ensure that these are integrated into client acceptance procedures and for the continuing monitoring of the business relationship. The three basic components are;-
(1) Identifying the client and verifying the identity of the client by obtaining evidence from documents, data or information obtained from indepenant and reliable sources.
(2) Identifying the beneficial owner(s) of a client, if there is one, so that the identity of the individual(s) who is the ultimate owner or controller is known and then verify their identities on a risk sensitive basis. Specific steps must be taken is ensure that the ownership and control structure is understood.
(3) Information on the purpose and intended nature of the business relationship
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