Unlock Our Latest Cutting-Edge Source of Funds Solution --> Discover more
New: 2024 Money Laundering and Financial Crime Report --> Read the full report
We're a multiple award-winning firm and one of the fastest-growing tech companies in the UK - find out how we got to where we are today.
We are always looking for talented individuals to join our growing team - if you are highly motivated with a positive attitude we want to hear from you.
Discover the latest events we will be hosting, exhibiting, and attending, where you can learn more about our industry-leading digital compliance solutions.
CDD Meaning: CDD stands for customer due diligence, a crucial part of establishing customer identity.
Customer due diligence is essentially the process of verifying that a customer is who they claim to be.
To perform customer due diligence - also known as CDD - firms must identify the client, and then check that they are who they’re claiming to be. This process involves obtaining details about the individual, including their name, photograph, address and date of birth. This is usually done by gaining access to documents like passports, driving licences or utility bills.
To carry out customer due diligence for a business, you’ll need to check the company is registered with Companies House, and identify any persons of significant control (PSCs). You’ll also need to find out if there are any ultimate beneficial owners, as well as look at the company's annual returns and statements.
Now that we’ve established the meaning of CDD, it’s important not just to answer ‘what is CDD?’ but also when is it needed?
The CDD process is a crucial part of every firm’s effort to remain AML compliant. By verifying the identity of your potential client, you minimise the chance of going into business with a high-risk individual or entity, who could make your company more vulnerable to money laundering.
Customer due diligence is required at the onboarding stage, when your firm is in the process of bringing in a new customer. Every firm that’s subject to money laundering regulations should be performing CDD as part of their risk-based approach to AML. This not only includes all businesses in the financial services sector, but also:
High value dealers
Estate agents
Money service businesses that aren’t monitored by the FCA
Telecom, digital & IT payment services that aren’t monitored by the FCA
Bill payment service providers that aren’t monitored by the FCA
Most firms still complete their customer due diligence manually. This involves checking physical ID documents to verify the person’s name, address and date of birth, and then checking that person’s details against sanctions and PEP lists.
However, manual checks leave room for human error, as passports and other documents can be easily forged.
Electronic ID verification is by far the most reliable way to complete AML checks, as it cross-checks a person’s details using multiple data platforms, as well as screening for sanctions and PEPs. If the documents or details provided are fake, electronic ID verification will expose this.
Now that you've ascertained what CDD is and why checks are crucial to establishing the identity of your customers, let’s dig into how SmartSearch’s own CDD-checking technology could be the solution for you.
With SmartSearch you can:
Conduct identity checks in under 2 minutes
Perform both international and domestic checks
Benefit from the highest pass rate on the market at 97%
Integrate our CDD tech with your CMS seamlessly - we integrate with over 30 different CMS types and case management tools
Join over 6,500 companies who use SmartSearch for their CDD checks and book a free demo today.
SmartSearch is a unique AML platform, which uses electronic ID verification to perform CDD quickly and accurately. This innovative product incorporates fully automated sanction checks, PEP, SIP and RCA screenings, offering an all-encompassing solution to verify individuals and businesses. The platform also offers daily monitoring to ensure all client firms remain fully compliant and protected throughout the life of their contract.
This is the core information that answers the question ‘what is CDD?’. We hope that you now have a better understanding of how CDD checks operate. The AML experts at SmartSearch have also put together some FAQs around the subject of customer due diligence.
CDD checks should be part of any responsible business's onboarding checklist. Not only will you be putting your business at risk by dealing with unverified customers, but you could also be subject to money laundering penalties such as fines.
Don’t get caught out by the consequences of anti money laundering regulations by skipping the CDD process.
Enhanced customer due diligence checks differ from standard customer due diligence because they are performed on high-risk individuals. The customer could be deemed high risk because of customer factors, such as being a Politically Exposed Person. It could also be based on geographical factors such as being from a country with sanctions or embargoes.
The result is that the customer will require an enhanced CDD process with a longer CDD checklist in order to establish the identity of the individual and the source of funds.
