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 2021/22 AML monitoring reviews
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.
Keeping CDD up-to-date
You should regularly review the documentation your firm 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 politically exposed person or if a suspicious activity report has been made.
Resources to support compliance
Read the report
Read our 2021/22 anti-money laundering supervision report for more detail on the results of our monitoring reviews, the outcomes of those reviews and enforcement action taken. The report also summarises all of our anti-money laundering supervisory activity during the period.