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Anti-money laundering

Customer due diligence on new clients

This page is part of a series on the 10 most common issues we've found when reviewing firms' compliance with the Anti-money Laundering Regulations.
See the 10 most common issues
Customer due diligence (CDD) is a process of checks designed to identify, risk assess and verify your client to make sure they are who they say they are. We found that some firms don’t perform CDD on all their new clients.

What we found in our 2022/23 AML monitoring reviews

We found that some firms don’t perform CDD on all their new clients. We raise this finding if there is no evidence of a client risk assessment on at least one of our sampled client files. Some of the firms in this bracket will have performed a client risk assessment on some of their clients but not all.

How should you perform CDD on new clients?

Firms should perform CDD on all new clients. This means that the engagement team should gather information on the client to determine who the client is, what it does and who the beneficial owner is. Using this information, firms should perform an AML risk assessment, considering those risks identified in their firm-wide risk assessment. They must then take steps to check the client is who they say they are. The amount of evidence firms need to gather will be determined by the AML risk profile of the client.

Why is it important?

Effective CDD is your greatest defence against being used to facilitate money laundering. It improves your firm’s ability to identify money laundering risks before a business relationship commences.

Resources to support compliance

Read the report

Read our 2022/23 anti-money laundering supervision report for more detail on the results of our monitoring reviews.

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