Customer Due Diligence - Best Practices

Customer Due Diligence (CDD) encompasses the process of identifying and verifying customer identities, and when applicable, determining the beneficial owners. This process is crucial when initiating a business relationship or conducting occasional transactions. The extent of CDD measures implemented depends on the risk assessment and the type of customer, business relationship, or transaction.

To implement CDD effectively, firms must:

• Establish and verify the identity of all individuals and entities involved in a business relationship.
• Understand the nature of their organizational or professional activities and validate the legitimacy of their funds and assets.
• Comprehend the purpose and intended nature of the specific customer relationship.
• Evaluate and mitigate associated risks.
• The level of CDD required depends on the risk rating of the client. Low-risk clients undergo simplified due diligence, while medium-risk clients undergo standard due diligence. High-risk clients, and situations involving politically exposed persons (PEP) or correspondent banking relationships, necessitate enhanced due diligence (EDD).

CDD entails collecting information about clients, whether they are individuals or corporate entities. Standard CDD for all business relationships primarily involves:

• Identification and verification: Confirming the identity of customers and their beneficial owners by collecting and validating personal information and documents like passports, driver's licenses, and addresses. Effective identity verification is crucial for risk assessment and regulatory compliance.
• Customer risk scoring: Assessing customers' risk levels using factors such as customer type, geography, transaction history, and more. Risk scores, typically categorized as low, medium, or high risk, determine the extent of CDD measures, ensuring compliance with anti-money laundering and Know Your Customer regulations. Regular risk score reviews enable proactive risk management.
• Screening: Systematically reviewing customer data against watchlists, sanctions lists, and politically exposed persons (PEP) databases to identify entities or individuals posing financial, reputational, or legal risks. Screening plays a critical role in compliance by helping organizations avoid interactions with sanctioned or high-risk entities, thereby preventing inadvertent involvement in money laundering, terrorist financing, or other illicit activities. Consistent and comprehensive screening ensures regulatory compliance and upholds the integrity of business relationships.

Themis Search offers immediate identity verification checks, including biometric facial recognition, ID document validation, and address verification for individuals. It enables worldwide searches to uncover potential links to criminal activity for both individuals and companies. Users can conduct extensive searches on related parties, create interactive risk maps, and perform full Customer Due Diligence (CDD) checks, including Adverse Media, PEPs, Sanctions, Litigation, and criminal convictions. 

We also provide access to Themis Special Interests Lists, a unique database of financial crime convictions. Users can generate and customize detailed due diligence reports, save searches for future reference, and utilize an anonymous ""Whistle-blower"" function to report criminal or organized crime group connections. Collaboration is facilitated by sharing investigations with colleagues, and comprehensive DD reports can be extracted for senior management presentations.