Customer Due Diligence (CDD) Quiz

Definition: The process of identifying and verifying the identity of customers, including their beneficial ownership and risk profile
Key components:
- Customer identification: Verifying customer identity through documents and data
- Customer categorization: Determining customer risk level based on factors such as country, industry, and business type
- Ongoing monitoring: Regularly reviewing customer information to identify changes in risk profile
CDD requirements:
- Identify and verify customer identity
- Identify and verify beneficial ownership
- Assess customer risk profile
- Implement ongoing monitoring and reporting

Definition: The process of checking customers, transactions, and other parties against lists of sanctioned individuals, entities, and countries
Key components:
- List management: Maintaining and updating lists of sanctioned parties
- Screening: Checking customers, transactions, and other parties against sanction lists
- Alert generation: Identifying potential matches and generating alerts for review
Sanctions screening types:
- Customer screening: Screening customers against sanction lists
- Transaction screening: Screening transactions against sanction lists
- Vendor screening: Screening vendors and third-party partners against sanction lists

Definition: The process of monitoring and analyzing customer transactions to identify suspicious activity
Key components:
- Transaction data collection: Gathering and analyzing transaction data
- Rule-based monitoring: Applying rules and scenarios to identify suspicious activity
- Machine learning and AI: Using machine learning and AI to identify patterns and anomalies
- Alert generation: Identifying potential suspicious activity and generating alerts for review
Transaction monitoring goals:
- Identify suspicious activity
- Detect and prevent money laundering and terrorist financing
- Meet regulatory requirements

Key regulations:
- Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations
- Bank Secrecy Act (BSA) and USA PATRIOT Act
- EU's 4th and 5th Anti-Money Laundering Directives
- Financial Action Task Force (FATF) recommendations
Regulatory requirements:
- Implementing AML/CFT programs
- Conducting customer due diligence
- Reporting suspicious activity
- Maintaining records and audit trails

Definition: The process of identifying, assessing, and mitigating risks associated with customers, products, and services
Key components:
- Risk identification: Identifying potential risks and vulnerabilities
- Risk assessment: Assessing the likelihood and impact of identified risks
- Risk mitigation: Implementing controls and measures to mitigate identified risks
- Ongoing monitoring: Regularly reviewing and updating risk assessments
Risk assessment factors:
- Customer risk profile
- Product and service risk
- Geographic risk
- Industry and business type risk

Identifying and verifying customer identity, including beneficial ownership and risk profile
Key components: customer identification, customer categorization, and ongoing monitoring
Verifying customer identity through documents and data
Determining customer risk level based on country, industry, and business type
Regularly reviewing customer information to identify changes in risk profile
CDD requirements: identify and verify customer identity, identify and verify beneficial ownership, assess customer risk profile, and implement ongoing monitoring and reporting

Checking customers, transactions, and other parties against lists of sanctioned individuals, entities, and countries
Key components: list management, screening, and alert generation
Maintaining and updating lists of sanctioned parties
Checking customers, transactions, and other parties against sanction lists
Identifying potential matches and generating alerts for review
Sanctions screening types: customer screening, transaction screening, and vendor screening

Monitoring and analyzing customer transactions to identify suspicious activity
Key components: transaction data collection, rule-based monitoring, machine learning and AI, and alert generation
Gathering and analyzing transaction data
Applying rules and scenarios to identify suspicious activity
Using machine learning and AI to identify patterns and anomalies
Identifying potential suspicious activity and generating alerts for review
Transaction monitoring goals: identify suspicious activity, detect and prevent money laundering and terrorist financing, and meet regulatory requirements

Key regulations: AML/CFT, BSA, USA PATRIOT Act, EU's 4th and 5th Anti-Money Laundering Directives, and FATF recommendations
Regulatory requirements: implementing AML/CFT programs, conducting customer due diligence, reporting suspicious activity, and maintaining records and audit trails
Implementing AML/CFT programs to prevent money laundering and terrorist financing
Conducting customer due diligence to identify and verify customer identity and risk profile
Reporting suspicious activity to regulatory authorities
Maintaining records and audit trails for regulatory compliance

Identifying, assessing, and mitigating risks associated with customers, products, and services
Key components: risk identification, risk assessment, risk mitigation, and ongoing monitoring
Identifying potential risks and vulnerabilities
Assessing the likelihood and impact of identified risks
Implementing controls and measures to mitigate identified risks
Regularly reviewing and updating risk assessments
Risk assessment factors: customer risk profile, product and service risk, geographic risk, and industry and business type risk