Customer research (CDD) can be described as process through which financial institutions obtain information about prospective clients. They screen financial transactions and look for indications of questionable activity. If they will discover any kind of suspicious activity, they will report it to the appropriate authorities. CDD is an ongoing process, when the fiscal transactions must be consistent with the bank’s knowledge of the client and risk profile. This kind of continuous nature allows documents to get updated frequently. CDD can be described as vital component to AML compliance.
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Also to assessing the likelihood of scams, customer homework includes building a risk profile. Due diligence commences with collecting information about a prospective consumer, their location and type of organization. The risk account will figure out how much research is required. High-risk customers need more due diligence than low-risk types. This process needs to be completed in agreement with legal and regulating requirements. When evaluating any customer’s risk profile, you need to remember that a low risk client may not be a risk on your business.
Banks must take client due diligence really. Fraud includes serious consequences, both just for the client as well as for the financial institution. A single fraud case can damage the reputation of the organization. To prevent such a scenario, organizations need to learn as far as possible about their legal and natural clients. Appropriate verification of clients can easily minimize fraud risks and help minimize the risk of money laundering. To accomplish this, companies must implement a strict due diligence process.