Customer due diligence on new clients

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.

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.

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.

• Watch our AMLbites video: CDD part 1
• Watch our AML webinar recording on CDD
• Read the CCAB Guidance section 5
• Watch our webinar on how to verify your clients