Customer Due Diligence In AML Training Ppt

Slide 1

This slide discusses what CDD is based on. CDD is based on three basic regulatory obligations: Customer identification, beneficial ownership, and business relationship. 

Instructor’s Notes: 

• Customer Identification: Companies are required to identify their clients by gathering personal information and data, such as name, government ID, address, and birth certificate, from a reliable and independent source
• Beneficial Ownership: Companies should try to identify Ultimate Beneficial Ownership (UBO) when a business or third party is working on the behalf of someone else. The idea is to have a record of individual(s) who benefit from the actions of a person or a group of people
• Business Relationship: Companies must identify the nature and purpose of the business relationship they are forming with the client in addition to identifying the customer and the beneficial ownership of the entity

Slide 2

This slide depicts when customer due diligence is required. CDD is required under the following circumstances: New business relationships, occasional transactions, money laundering suspicion, ongoing monitoring, and unreliable documentation.

Instructor’s Notes: 

• New Business Relationships: Information collected on new customers will help make sure they are not using a false identity to access services
• Occasional Transactions: CDD procedures are necessary if a transaction exceeds regulatory criteria or involves firms in high-risk foreign nations
• Money Laundering Suspicion: Companies should undertake further CDD checks if a customer is suspected of financing terrorism or money laundering
• Ongoing Monitoring: Companies should carry out CDD throughout the entirety of a business relationship to make sure that transactions match the established risk profiles of their clients
• Unreliable Documentation: Organizations should conduct stricter CDD to resolve discrepancies when customers provide insufficient identification documents

Slide 3

This slide depicts the step-by-step process of conducting customer due diligence. The steps are: Identification, verification, nature of relationship, additional information, documentation, and AML risk scoring. 

Instructor’s Notes: 

• Identification: The first step is identifying the customer. This can be as basic as identifying their first and last name
• Verification: The next step is verification. This can include verifying your client’s government ID card or passport. The verification of a client’s or beneficial owner’s identity is critically important
• Nature of Relationship: The next thing you should establish as part of your CDD program is the goal and intended nature of the business relation
• Additional Information: The information you gather from the customer may also include their location, their occupation, the types of business transactions they want to do with you, payment methods, their geographical area, and the industry they operate in
• Documentation: It is essential to document all information collected from the customers, preferably on an IT system 
• AML Risk Scoring: The last step entails determining the money laundering or terrorist financing risk a customer poses to your organization. You can determine a client’s risk score based on a three-tier scale: low, moderate, high

Slide 4

This slide tells us how to deal with politically exposed persons or PEPs. A PEP is an individual that has been in-charge of a prominent public role or political function. 

Instructor’s Notes: 

• Identifying PEPs: Numerous databases list people with current or previous political roles or other prominent functions. These databases can be used to identify PEPs. PEPs can also include immediate family members
• Obtaining senior management approval: Since PEPs pose a potentially high risk of money laundering, senior management approval is required to establish or continue a business relationship
• Establishing source of funds: It is essential to determine the source of funds of PEPs to ensure no involvement in money laundering or terrorist financing
• Applying ongoing EDD: Finally, enhanced due diligence and ongoing monitoring are applicable to PEPs