Customer Due Diligence (CDD) is a critical process in Know Your Customer (KYC) procedures, involving the verification of customer identities and assessment of potential risks in business relationships. Enhanced Due Diligence (EDD) goes a step further, applying additional scrutiny to high-risk customers or transactions. These processes are essential for financial institutions and businesses to comply with anti-money laundering (AML) regulations, combat financial crime, and mitigate risks effectively.
Key Challenges in Customer Due Diligence
- Authenticating ID & Address proof and other documents submitted by potential customers to ensure that identity thefts and forgeries are detected at an early stage.
- Ensuring that all the pertinent customer information and documents have been collected & digitally stored as per the types of customers and risk categories they belong to.
- Beyond the basic customer due diligence, being able to carry out regulatory process driven additional & enhanced due diligence as customers transition into higher risk categories.
- Keeping historical records of all the due diligence activities performed on each of the customer for regulatory scrutiny in the future.
- Process, questionnaire and checklist driven identification of sources of funds, ultimate beneficial owners and making host of other discoveries under enhanced due diligence process.
Get a FREE Guide to help you navigate through regulatory guidelines on Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) processes to be followed.
KYCsphere’s Customer Due Diligence Solution
With the complexities involved in identifying customers, conducting Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), across different types of customers & jurisdictions that they belong to and the types of business relationships that they want to establish with your institution, it would be a gross mistake if you were to rely on just your employee discretion to capture customer due diligence information. Largest of institutions have failed to do requisite enhanced due diligence while dealing with high-risk customers and multi-country corporate vehicles, leading to subsequent fines & penalties. Without an automated regulatory process driven due diligence, it is almost impossible to capture all the necessary customer attributes & questionnaires & checklists-based information, essential for serious due diligence on your customers.
KYCsphere’s AI-powered Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) tool hides all the complexity behind the simple user interface for only the required customer data to be captured and relevant questions to be asked while dealing with a variety of customer profiles across different lines of businesses and jurisdictions. Beyond capturing of customer data & information, the tool automatically triggers the verification process of submitted documents along with several CDD analysis steps to build a comprehensive customer profile.
This disciplined due diligence process is especially useful while identifying all the associated individuals of complex corporate vehicles & legal entities, including their major shareholders, board members, senior management, signatories, partners, key customers and ultimate beneficial owners. A comprehensive customer profile thus generated allows accurate risk rating of the relationship and keeps your institution prepared to withstand regulatory scrutiny at any time in the future.
This feature-rich tool can give your institution market agility and regulatory flexibility without any capital expenditure and with the least of IT intervention.
See KYCsphere‘s Customer Due Diligence tool in action.
Key Benefits of KYCsphere’s Customer Due Diligence Tool
- Generating of a checklist of necessary documents to be collected as per jurisdiction, line of business and customer’s risk rating specific ID, address proof and other documentation as recommended by the regulator. Handle the process of documents collection, their image retention and revalidation on expiry, effortlessly with the tool.
- Conducting periodic due diligence assessments as per the regulatory process recommended best practices, review findings and recording associated risks.
- Building a repository of all the due diligence information collected, including additional documents, customer interview proceedings, relationship manager feedback, due diligence processes followed, its findings & conclusions.
- Identifying newer business development opportunities based on extensive due diligence based 360° view of the existing customer relationship.
Ask our Customer Due Diligence Expert to get in touch with you.
FAQs
What is Customer Due Diligence (CDD) in KYC?
Customer Due Diligence (CDD) is the process of verifying the identity of customers and assessing the risks they may pose in a business relationship. KYCsphere’s CDD tool automates this process, ensuring that institutions capture essential data and comply with KYC AML regulations.
When is Enhanced Due Diligence (EDD) required?
Enhanced Due Diligence (EDD) is required when dealing with high-risk customers or transactions, such as politically exposed persons (PEPs), businesses in high-risk sectors, or customers from sanctioned countries. KYCsphere’s tool helps manage these higher-risk profiles by applying additional scrutiny and gathering extensive data.
What’s the difference between CDD and EDD?
CDD involves verifying basic customer information and assessing low-risk customers. EDD goes beyond CDD by applying a deeper level of scrutiny for high-risk customers or transactions. KYCsphere’s tool automates both processes, ensuring regulatory compliance for all customer types.
What is CDD checklist?
A Customer Due Diligence (CDD) checklist is a structured set of questions used to collect essential information about customers during the due diligence process. It helps institutions assess potential risks and ensure compliance with regulatory requirements.
How does the EDD tool customize the CDD/EDD checklist for each customer’s unique attributes and behavior?
KYCsphere’s Enhanced Due Diligence (EDD) tool customizes the CDD/EDD checklist by dynamically generating questions based on specific customer attributes and transactional behavior. This ensures that the due diligence process is tailored to each individual’s risk profile, allowing for a more precise and effective assessment of potential risks associated with that customer. By analyzing data such as customer demographics, transaction history, and risk factors, the tool creates a relevant checklist that enhances compliance and mitigates risks.