In a world where identities online are more fluid than ever, performing solid and sturdy customer due diligence (CDD) has become more important than before.
PassFort recently went into further detail on the topic of customer due diligence and the role in plays in identity verification.
Customer due diligence (CDD) is the process of verifying a customer’s identity, assessing the risk of doing business with them, and the monitoring that risk level throughout their lifecycle. The goals of CDD are to prevent identity theft, money laundering, and other financial crimes.
CDD is an essential part of compliance with AML and anti-bribery and corruption laws. Typically, a CDD process involves collecting data to verify someone’s identity and assessing the risk of working with them. CDD often happens before a new customer is onboarded and then at regular intervals throughout their lifecycle.
During CDD, you may check key documentation – such as a passport or driving licence – in order to prove someone is who they claim to be. Such processes are designed to protect regulated firms from transacting with criminals like money launders and fraudsters.
What are important elements in CDD? According to PassFort, these include verifying identity, address verification, identifying ultimate beneficial owners, understanding a customer’s business and ongoing monitoring.
To conduct CDD, some companies rely on manual methods – however the downside to this is that they are time-consuming and are prone to human error. Plus, it can be a poor experience for the customer involved.
PassFort remarked, “It’s best practice to use automation to create smoother, more seamless CDD processes, which minimize errors and maximise efficiency. Automated KYC systems like PassFort can be used to gather customer data from trusted sources, bringing results back into one platform to create a 360-degree view of customer information and a profile of risk. This is a more accurate and consistent way of performing CDD, which avoids human error and creates better experiences for customers. Additionally, automation helps speed up processes, increasing efficiency, and ensuring economies of scale i.e., if you want to onboard more customers, you don’t have to employ more compliance staff to do it.”
Despite this, PassFort claims it is important to bring compliance professionals in where they add value for judgement calls, analysis and decision making.
In regard to how often CDD should be undertook, PassFort claims there is no definitive answer for how long, stating, “Ultimately, it is up to you and your business how often you understand CDD. However, as the world of compliance and risk management becomes increasingly digital, firms are turning to perpetual KYC or pKYC to highlight risks across their business network. pKYC involves continuous monitoring of risk factors, which help you keep up with material changes to a customer’s risk profile. By using a continuous approach to maintaining risk records, you can provide better customer support and better protection for your firm.
PassFort concluded, “Customer due diligence is a key part of compliance with anti-financial crime laws for regulated businesses. Verifying a customer’s identity and assessing the risk they may pose to your company is essential. How and when CDD is conducted is down to you, and what level of risk you assume is also your choice.”
Find the full post here.
Nvayo, an electronic money issuer (EMI) serving ultra-high-net-worth and underserved clients, chose to use PassFort’s KYC solution for customer onboarding earlier this year.
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