Client Due Diligence Summary


Client due diligence is at the heart of the 2007 Regulations. As can be seen it has various elements;

  • Risk assessment of all clients
  • Identification of clients
  • Identification of beneficial owners
  • Verification procedures
  • Knowing your client and knowing their business requirements
    Ongoing monitoring  including scrutiny of transactions and where necessary the source of funds, and
  • Ensuring documents data or information is kept up to date.

It is not just of the start of the relationship but for the length of it and then retaining your records for a further five years from the date of cessation of that client relationship. Retaining details of our permanent files, the identity and verification details of that client and our internal and external suspicious activity reports are a crucial part of our obligations under PoCA and ML Regulations 2007.

It is this information that may help financial investigators if they need to make an investigation into the proceedings of one of our clients. It helps demonstrate to those financial investigators that we have been used in any offence that may have been committed, unknowingly and unwittingly.  It is a core part of our defence of committing a money laundering offence when we may not have spotted any suspicious activity to report as a firm to report. What we did was to that of a ‘reasonable standard’.

‘Knowing Your Client’ (KYC) then, is the backbone of the client due diligence procedures. KYC starts with the initial background enquiries of the client in the account opening procedures. It is usually this KYC information which when used in risk assessment will dictate the amount of client due diligence to be undertaken and the level of control and responsibility that will be attached to that client by the firm. KYC continues for the length of the relationship helping assess changes in circumstance.
Robust client due diligence procedures can help in ‘harm reduction’ and mitigating the risks to the firm and its staff from the risks posed by the money launderer and those who finance terrorism.

Section 8: Self assessment. This section is far simpler than it at first seems and centres largely on common sense.

  1. Do you know what the basic elements of identity for AML purposes are?
  2. Do you understand why new customers should be identified?
  3. Do you know the three main methods criminals use to disguise their identities?