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Anti-money laundering

Updating customer due diligence

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
The most common finding from our 2022/23 AML monitoring reviews related to updating customer due diligence. Where we made this finding, firms were not performing, and updating, their customer due diligence throughout the duration of the client relationship.

What is customer due diligence?

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.

The purpose of CDD is to know and understand a client’s identity and business activities so that any money laundering and terrorist finance risks can be properly managed.

What we found in our 2022/23 AML monitoring reviews

We find that firms are not performing, and updating, their CDD throughout the duration of the client relationship. We raise this finding if there is no evidence of updated CDD on at least one of our sampled client files. Some of the firms in this bracket will have updated CDD on some of their clients but not all. Some firms may have considered whether there are changes but not recorded the review. In some firms, their electronic CDD system makes it difficult to document how they have updated their review.

The firm should regularly review the documentation it has obtained as part of the know-your-client checks. If any of the information has changed, it should be fed back into the client risk assessment.

How often should you update CDD?

The frequency of the review should be determined on a risk basis but there may also be trigger events such as providing a new service to an existing client, significant changes to key office holders, the introduction of a PEP or if a suspicious activity report has been made.

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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