As a regulation-driven practice, CDD is not only essential for protecting banking institutions but also for safeguarding the overall financial system. By conducting thorough due diligence on their customers, banks can contribute to the prevention of money laundering, the financing of terrorism, and ot...
The level of CDD in banking will depend on the type of business-customer relationship and the customer’s risk profile. But broadly, banks must take necessary steps to make sure that the customer is really who they say they are so that they can prevent fraudulent activity such as identity f...
CDD and EDD are both forms of KYC procedures. The difference between EDD and CDD is rooted in their distinct roles within KYC procedures. EDD goes beyond CDD, which focuses on confirming a consumer's identity through data comparison and necessarycheckslike documents and biometrics during account o...
Why is KYC important to the banking industry? The process is critical to ensure that banking customers are real and do not practice risky behaviors that would inevitably be detrimental to the bank overall (e.g., preventing money laundering, fraudulent activities, etc.). The KYC process is not...
Customer due diligence (CDD): Assessing the risk level of customers and monitoring their transactions accordingly. Enhanced due diligence (EDD): More intensive identity verification is needed for higher-risk categories. Ongoing monitoring: Continuously observing customer transactions to prevent deviations fro...
CDD is at the heart ofAnti-Money Laundering(AML) andKnow Your Customer(KYC) initiatives. It helps banks and financial institutions prevent financial crimes like money laundering, terrorist financing, human and drug trafficking and fraud. Why is CDD Important?
In addition,FATF’s Recommendation 19states that EDD measures should be carried out on“business relationships and transactions with natural and legal persons, and financial institutions, from countries for which this is called for by the FATF.” Institutions should implementKYC/AMLand allCDD measures...
There is a checklist for companies to improve their CDD and EDD practice. 1.CDD actions should be taken before doing business with new clients. First of all, you should learn where the company of your client is located, what business model they use, and what their interests are. It’s ...
In banking, know your customer (KYC) refers to the series of mandatory processes necessary to identify who a given client is when they’re opening an account so that the bank can confirm they are who they say they are. Even though the series of actions required to help a bank identify ...
CDD is a process in which all of a customer’s credentials are collected to verify their identity and evaluate their risk profile for suspicious account activity. Enhanced Due Diligence EDD is used for customers that are at a higher risk of infiltration, terrorism financing, or money laundering ...