AML Due Diligence

Customer due diligence ('CDD') involves: identifying and verifying customer identity (on the basis of documents, data or information obtained from a reliable and independent source); and obtaining information on the purpose and intended nature of the business relationship.

Additional CDD measures should be undertaken where: (a) a beneficial owner (who is not the customer) is in a position to exert influence over a customer relationship; or (b) a customer relationship involves a Politically Exposed Person ('PEP').

Core requirements (Examples)

A regulated firm's CDD arrangements must comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ('MLR'), including:

  1. The identification and assessment of money laundering and terrorist financing risk - Taking account of:
    • Information provided by the regulator (e.g. FCA) under the MLR.
    • Customer, geography, product/service, transaction and delivery channel risks.
  2. Establishing beneficial ownership of a legal person, trust or similar legal arrangement, via controls designed to ensure a documented understanding of ultimate ownership and control by one or more natural persons (i.e. named individuals).
  3. Where a PEP, relative of a PEP, or a known close associate of a PEP is involved in a business relationship, adequate measures must be taken to establish the source of wealth and source of funds involved in the proposed business relationship or transactions with that person.
  4. Where a firm is unable to satisfy itself as to the identity of a customer or the beneficial owner (who is not the customer); verify that identity; or obtain sufficient information on the nature and intended purpose of the business relationship, it must not enter into a new business relationship and must terminate an existing one [MLR 31 (1)]

Customer due diligence

The response to CDD risk should:

How we can help you

For non-standard and higher-risk relationships at new-customer on-boarding, or as part of a periodic or event driven review process, FCRM can undertake due-diligence research to assist a client firm's assessment of customer (or business counterparty) risk.

Where practicable, particularly on international enquiries, we utilise a network of independent specialists who are accustomed to undertaking confidential and sensitive due diligence assignments, often with knowledge of the local language and research capability.

Integrity in Business Practice