馃攳
What is Customer Due Diligence | What is Risk-Based Approach | CDD Documentation - AML/KYC Tutorial - YouTube
Channel: KYC Lookup
[0]
in the world that we live in today
[2]
everyone likes an acronym
[3]
whether it's abc kyc or aml
[7]
but what do they mean to people outside
[9]
of the industry
[11]
hello and welcome to another kyc lookup
[14]
video
[15]
where we bring you aml related content
[17]
to help you
[18]
enhance your knowledge in the fight
[19]
against money laundering
[21]
today we are going to explain what is a
[23]
customer due diligence
[25]
when is it required and what are the
[27]
most commonly used documents
[30]
but before diving into today's video be
[33]
sure to subscribe
[34]
so you don't miss out on any future
[36]
videos oh
[37]
and don't forget to leave us a comment
[39]
with any suggested topics you would like
[41]
us to cover in the future
[44]
so what is customer due diligence
[47]
customer due diligence or cdd as it is
[51]
also known as
[52]
is the process and procedures companies
[54]
follow to gather sufficient information
[57]
on a new customer or existing customer
[60]
and to assess the risks of doing
[62]
business with them whether it's at the
[63]
start of the relationship
[65]
or once established why do we carry
[69]
out the customer due diligence cdd
[72]
is carried out to protect the financial
[74]
institution
[75]
entering the new relationship being used
[77]
directly
[78]
or indirectly for money laundering and
[80]
terrorist financing purposes
[83]
it is also set out in local law
[85]
following the recommendations of the
[87]
financial action task force
[89]
that customer due diligence measures
[91]
should be undertaken when
[93]
establishing business relations carrying
[96]
out occasional transactions
[98]
these might involve amounts of money
[99]
over a certain threshold
[101]
or entities in high risk foreign
[103]
countries there is a suspicion of money
[105]
laundering or terrorist financing
[108]
or the financial institution has doubts
[110]
about the vericity
[111]
and adequacy of the previously obtained
[114]
customer identification
[115]
data what are the regulatory obligations
[119]
behind cdd
[121]
as the financial action task force
[124]
highlights in recommendation 10
[126]
financial institutions are required to
[128]
take enough measure
[129]
to determine they are comfortable and
[131]
satisfied that they know
[133]
who their client is before entering into
[135]
a business relationship
[137]
in order to satisfy this recommendation
[140]
financial institutions should take the
[142]
following measures
[143]
identifying the customer and verifying
[146]
that the customer's
[147]
identity using reliable independent
[150]
source documents
[151]
data or information identifying the
[154]
beneficial owner
[155]
and taking responsible measures to
[157]
verify the identity of the beneficial
[160]
owner
[160]
such that the financial institution is
[163]
satisfied that it knows who the
[164]
beneficial owner is
[166]
for legal persons and arrangements this
[169]
should include financial institutions
[171]
understanding the ownership and control
[173]
structure of the customer
[175]
understanding and as appropriate
[178]
obtaining information on the purpose and
[180]
intended nature of the business
[182]
relationship
[183]
conducting ongoing due diligence on the
[185]
business relationship
[187]
and scrutiny of transactions undertaken
[189]
throughout the course of the
[190]
relationship
[191]
to ensure that the transactions being
[193]
conducted are consistent with the
[195]
institutions knowledge of the customer
[197]
their business and risk profile
[200]
including where necessary
[201]
the source of funds what is a risk-based
[205]
approach
[206]
and when does it apply a risk-based
[208]
approach means companies should identify
[211]
assess and understand the money
[213]
laundering and terrorist financial risks
[216]
of their customer this is determined by
[218]
evaluating
[219]
each individual customer on their own
[221]
merit
[222]
and not using a rule-based approach
[224]
where all customers
[226]
are treated the same companies should
[228]
take into account
[229]
a risk-based approach at the time of
[231]
setting up their aml policy and
[233]
procedures
[234]
in order to have an effective foundation
[236]
for their anti-money laundering
[238]
and counter financing terrorism
[240]
programme most importantly
[242]
by having a risk-based approach
[244]
companies are able to adjust the level
[246]
of due diligence required in line
[248]
with the risk presented by the customer
[251]
what documentation do you need to carry
[254]
out the customer due diligence
[256]
although there is no set list of
[258]
documentation or information required
[260]
as it varies based on the entity type
[263]
jurisdiction of where the company is
[264]
registered in
[265]
or being serviced from as well as the
[267]
risk rating given to the customer
[270]
however we can look at the key
[272]
components we need to look out for
[274]
customer identity beneficial ownership
[278]
products and services provided some of
[281]
the documentation used to cover customer
[283]
identity could be
[285]
certificate of incorporation articles of
[288]
memorandum
[290]
registration and business address if the
[293]
customer is an individual
[294]
information such as full name
[298]
photographic id address and birth
[301]
certification would be required
[304]
beneficial ownership information should
[307]
be determined in line with the risk
[308]
presented by the customer
[310]
meaning the higher the risk lower the
[313]
threshold
[314]
for example a higher risk customer
[316]
should require a 10
[318]
beneficial ownership whereas a low or
[321]
medium risk customer
[322]
may require a 25 threshold
[326]
documentation used to determine the
[328]
ownership can be
[329]
ownership structure share registry
[333]
annual report in the scenario where the
[336]
customer doesn't have ultimate
[337]
beneficial owners meeting the threshold
[339]
it will require to identify the most
[342]
senior controlling party
[343]
with the day-to-day control of the
[345]
company the last key component of
[348]
understanding the product and services
[350]
offered by the customer
[351]
this information is key in order to
[353]
understand if the customer is eligible
[355]
to accept it as your client
[357]
or to understand if it fits with your
[359]
risk appetite
[361]
documentation used to confirm this item
[364]
can be
[365]
articles of memorandum or association
[368]
annual report may highlight this
[370]
information
[372]
local registries will highlight sic
[375]
or the naics code
[378]
okay let's recap so what is customer due
[383]
diligence
[384]
customer due diligence or cdd as it is
[387]
also known as
[388]
is the process and procedures companies
[390]
follow to gather sufficient information
[392]
on a new customer
[394]
or existing customer and to assess the
[396]
risks of doing business with them
[398]
whether it's at the start of the
[399]
relationship or once established
[402]
where does the cdd requirement originate
[405]
from
[406]
financial action task force highlights
[408]
in recommendation 10
[410]
financial institutions are required to
[412]
take enough measure to determine they
[414]
are comfortable
[414]
and satisfied that they know who the
[417]
client is
[418]
before entering into a business
[419]
relationship
[421]
the key components of the cdd
[423]
requirements are to identify the
[425]
customer identity beneficial ownership
[428]
and products and services provided
[431]
well there you have it a basic
[434]
introduction to what is customer due
[436]
diligence
[436]
when is it required and whether the most
[439]
commonly used documents
[441]
please tell us in the comments section
[443]
what is your interpretation of customer
[445]
due diligence
[446]
thank you for watching the video and if
[449]
you made it this far
[450]
don't forget to like and subscribe to
[452]
watch more amazing videos
Most Recent Videos:
You can go back to the homepage right here: Homepage