Customer Due Diligence (CDD) in Know Your Customer (KYC)

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What is the primary objective of Customer Due Diligence?

To provide a summary of the investigation

To identify and verify customers and assess their risks (correct)

To classify customers based on their products and services

To monitor transactions

What is the relation between Customer Due Diligence and the Act on the prevention of money laundering and financing of terrorism?

CDD is a process used by companies that are exempt from the Act

CDD is a process used by companies that want to comply with the Act

CDD is an optional process for companies that are not subject to the Act

CDD is a mandatory process for companies that are subject to the Act (correct)

Which of the following is NOT a type of institution that is subject to the Act on the prevention of money laundering and financing of terrorism?

Banks

Insurance companies

Law firms

Retail stores (correct)

What is the outcome of a Customer Due Diligence investigation?

A risk rating for the customer (D) Signup and view all the answers

What is the main focus of Transaction Monitoring?

Monitoring transactions for suspicious activity (C) Signup and view all the answers

What is the purpose of the risk classification in Customer Due Diligence?

To identify high-risk customers (B) Signup and view all the answers

What is the primary goal of the CDD analyst?

To use policies to take a calculated risk (B) Signup and view all the answers

What is the purpose of the Onboarding process in Customer Due Diligence?

To assess integrity risks before providing products and services (C) Signup and view all the answers

What initiates an Event Driven Review?

A signal from Transaction Monitoring (B) Signup and view all the answers

What is the role of the CARC committee?

To make decisions about client departures or measures (B) Signup and view all the answers

What is the purpose of the Client Exit process?

To stop the relationship with the customer (B) Signup and view all the answers

What is the difference between Onboarding and Periodic Review?

Onboarding is a one-time assessment, while Periodic Review is conducted periodically (D) Signup and view all the answers

What type of investigation is conducted when a client's risk rating is high or unacceptable?

Enhanced Due Diligence (C) Signup and view all the answers

What is the purpose of the CDD analyst's investigation?

To assign a risk classification to the client (C) Signup and view all the answers

What is the role of the relationship manager in the Customer Due Diligence process?

To communicate with the client and provide information to the CDD analyst (C) Signup and view all the answers

What are the four different work streams in Customer Due Diligence?

Onboarding, Event Driven Review, Periodic Review, and Exit (A) Signup and view all the answers

What is the primary purpose of a simplified client due diligence investigation?

To reduce costs and administrative burdens for the anti-money laundering obligated institution and the client (D) Signup and view all the answers

In which scenario would a standard investigation be conducted?

When the client operates only in the Netherlands and has no organizational structure to foreign countries (C) Signup and view all the answers

What is the primary difference between a standard investigation and an enhanced due diligence investigation?

The level of risk posed by the client (C) Signup and view all the answers

What is the outcome of an enhanced due diligence investigation?

A better understanding of the risks posed by the client so that the institution can take adequate measures to manage those risks (C) Signup and view all the answers

Which of the following is an example of a client that would require an enhanced due diligence investigation?

An oil storage, transport company that has business operations throughout Europe as well as parts of North Africa and Asia (B) Signup and view all the answers

What is the primary goal of an anti-money laundering obligated institution when conducting a client due diligence investigation?

To identify and verify the client and to perform risk assessment (A) Signup and view all the answers