When is Customer Due Diligence Performed?

Client onboarding

CDD is a core component of the client onboarding process–which involves verifying identity and assessing risk to ensure that only trustworthy clients are accepted.
Establish a compliant foundation for client onboarding that minimizes the risk of illicit activities.

High-value or occasional transactions

When transactions exceed regulatory thresholds or are structured to avoid detection, CDD must be applied.
Analyze large or fragmented transactions to flag potential money laundering or fraud.
Ensure that these transactions are thoroughly vetted to prevent circumvention of standard checks.

Unusual activity

If customer information is inconsistent or behavioural patterns deviate from the norm, enhanced CDD is required.
Scrutinize anomalies like sudden transaction spikes or unexpected changes in behaviour.
Implement additional checks to verify legitimacy and update risk assessments as needed.

High-risk profiles

Customers classified as high-risk (e.g. politically exposed persons or those from high-risk jurisdictions) demand additional scrutiny through enhanced due diligence.
Conduct rigorous checks, including beneficial ownership verification and adverse media screening, to mitigate higher inherent risks.
Apply extra layers of verification to ensure compliance with stringent regulatory requirements.

The Regulatory Landscape for CDD

Regulators around the world have established stringent rules for CDD to safeguard the financial system. Some key frameworks include:

FATF Recommendations (Global Standards): The Financial Action Task Force (FATF) sets international standards that require all countries to implement risk-based CDD measures.
EU Directives: European regulations, such as the EU’s Corporate Sustainability Due Diligence Directive, indirectly impact CDD practices by requiring thorough verification of customer data and beneficial ownership details.
United States: The Financial Crimes Enforcement Network (FinCEN) has implemented the CDD Final Rule, which mandates that banks verify beneficial ownership and continually monitor customer activities.
National Guidelines: Many countries, including the United Kingdom, follow local regulatory guidelines that mirror international standards, with heavy penalties for non-compliance. For example, failure to conduct adequate CDD in 2022 contributed to fines nearing billions of dollars globally.

Bottom Line: Customer Due Diligence Solutions

Customer Due Diligence is an essential pillar of modern financial compliance. By verifying identities, understanding customer relationships, and continually monitoring transactions, organisations can significantly mitigate the risks of financial crime and regulatory non-compliance.

While the process can be complex and resource-intensive, leveraging technology—such as the innovative solutions offered by Binderr—can streamline compliance efforts and ensure that customer due diligence procedures remain robust and up-to-date.

Binderr is an all-in-one compliance platform that offers comprehensive KYC, KYB, and AML solutions, streamlining your entire compliance process. With Binderr, you can:

Automate Client Onboarding: Reduce onboarding time and boost overall efficiency.
Verify Identities: Our KYC solution utilises advanced biometric verification (including facial recognition) and document verification technology to accurately confirm user identities.
Verify Business Entities and UBOs: The KYB solution enables the verification of business details and identification of ultimate beneficial owners (UBOs).
Conduct AML Screening: Screen users against watchlists, sanctions, politically exposed persons (PEPs), and adverse media.
Monitor Risk Continuously: Keep customer data up-to-date with live data syncing and AI-powered risk assessments.
Risk Assessment: Benefit from an advanced risk assessment feature that assigns an AI-driven risk score to each customer. This allows you to categorise customers based on their risk profiles, ensuring that high-risk clients receive enhanced scrutiny while low-risk clients benefit from a streamlined process.

By integrating Binderr into your compliance programme, you can achieve a seamless and robust CDD process, ensuring that your organisation remains ahead of regulatory demands.

CDD Customer Due Diligence FAQs

Open a Business Bank Account in Ireland as a Non‑Resident