Customer due diligence explained for new reporting entities

What is CDD?

Customer Due Diligence (CDD) is often colloquially known as "Know Your Customer" (KYC). It is the legal requirement to understand exactly who you are providing a designated service to, protecting your business from anonymously serving criminals.

Collecting and Verifying Information

You cannot just take a client's word for it. You must collect identifying information (like their name, address, and date of birth) and verify it using reliable, independent sources, such as a passport or driver's license.

Finding the "Beneficial Owner"

If your client is a company or a trust, your CDD isn't finished when you identify the business name. Criminals often hide behind complex corporate layers. You must peel back these layers to identify the actual human beings who ultimately own or control the business (the Beneficial Owners).

Ongoing Due Diligence

CDD is rarely a "one-and-done" task. You must continually monitor the business relationship to ensure their transactions match your understanding of their risk profile, and you must update your records if their identifying information changes.