Podcast Beta
Questions and Answers
Customer Due Diligence is a key aspect of the Know Your Customer workfield.
True
Transaction Monitoring is covered in the same course as Customer Due Diligence.
False
CDD analysts are primarily responsible for investigating money laundering activities.
False
The purpose of CDD investigation is to provide a risk rating only for high-risk customers.
Signup and view all the answers
Law firms are not among the institutions subject to Act on the prevention of money laundering and financing of terrorism.
Signup and view all the answers
The CDD process focuses on identifying and verifying the customer, as well as understanding how products and services are used.
Signup and view all the answers
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
Signup and view all the answers
A computer store operating only in the Netherlands and not cash-intensive would typically undergo an enhanced Due Diligence investigation.
Signup and view all the answers
Enhanced Due Diligence investigations are conducted on clients who present a higher risk of money laundering, terrorist financing, or other integrity risks.
Signup and view all the answers
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
Signup and view all the answers
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
Signup and view all the answers
An oil storage, transport company operating in Europe, North Africa, and Asia is an example that would typically undergo a simplified client due diligence process.
Signup and view all the answers
The CDD analyst is responsible for investigating customer information and communicating with stakeholders.
Signup and view all the answers
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
Signup and view all the answers
Onboarding is the first step where a customer is investigated to check if they comply with institution policies.
Signup and view all the answers
Event Driven Review only occurs when there is an increased risk identified in a customer profile.
Signup and view all the answers
Simple, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
Signup and view all the answers
CARC stands for Customer Assessment and Risk Classification.
Signup and view all the answers
In Periodic Review, clients are not re-investigated after the initial onboarding process.
Signup and view all the answers
Transaction Monitoring cannot initiate an Event Driven Review in Customer Due Diligence.
Signup and view all the answers
An internal colleague, like a relationship manager, cannot trigger an Event Driven Review based on changes observed in a customer's profile.
Signup and view all the answers
Customer exit involves a more extensive department compared to other work streams in Customer Due Diligence.
Signup and view all the answers
During a simplified client due diligence process, it is not necessary to investigate the origin of the client's assets.
Signup and view all the answers
An oil storage, transport company with operations in Europe, North Africa, and Asia would typically undergo a standard Due Diligence investigation.
Signup and view all the answers
Enhanced Due Diligence investigations focus on clients with low risks of money laundering or terrorist financing.
Signup and view all the answers
A simplified client due diligence process aims to increase administrative burdens for both the institution and the client.
Signup and view all the answers
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
Signup and view all the answers
Customer exit involves a less extensive department compared to other work streams in Customer Due Diligence.
Signup and view all the answers
The main work streams in the Know Your Customer workfield are Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).
Signup and view all the answers
CDD investigations are only required for financial institutions such as banks and insurance companies.
Signup and view all the answers
Enhanced Due Diligence (EDD) investigations are conducted on all customers of mandatory institutions.
Signup and view all the answers
The primary goal of the CDD analyst is to provide risk ratings for all customers of an institution.
Signup and view all the answers
Transaction Monitoring can initiate an Event Driven Review based on detected changes in a customer's profile.
Signup and view all the answers
Simplified, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
Signup and view all the answers
During the Periodic Review, clients are thoroughly investigated again in a frequent period by default.
Signup and view all the answers
Event Driven Review can be triggered by signals such as changes in a customer's organizational structure.
Signup and view all the answers
CDD analysts are primarily responsible for investigating money laundering activities.
Signup and view all the answers
Enhanced Due Diligence investigations are conducted on clients presenting simple integrity risks.
Signup and view all the answers
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
Signup and view all the answers
Client exit involves a smaller department compared to other work streams in Customer Due Diligence.
Signup and view all the answers
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
Signup and view all the answers
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
Signup and view all the answers
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
Signup and view all the answers
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
Signup and view all the answers
Study Notes
Customer Due Diligence (CDD)
- A process used by organizations to comply with the Act on the prevention of money laundering and financing of terrorism
- Goal: to identify and verify the customer, understand their business activities, and assess the risks of facilitating money laundering, terrorist financing, and other illegal activities
Types of Investigations
- Simplified Due Diligence: a lighter version of the process to identify and verify the client and perform risk assessment, used for low-risk clients
- Example: a municipality or province in the Netherlands
- Standard Due Diligence: a more extensive investigation to determine the client's risk level and ensure they fit within the institution's risk appetite
- Example: a computer store that operates only in the Netherlands and has no organizational structure to foreign countries
- Enhanced Due Diligence: a more in-depth investigation conducted on clients who present a higher risk of money laundering, terrorist financing, or other integrity risks
- Example: an oil storage, transport company that has business operations throughout Europe, North Africa, and Asia
Role of a CDD Analyst
- Performs various tasks, including collecting customer information, communicating with stakeholders, and consulting internal and public sources
- primary goal: to use the policies of the Act on the prevention of money laundering and financing of terrorism to take a calculated risk
- May need to take action for higher risks, cooperating with the customer, relationship manager, and compliance
Work Streams in Customer Due Diligence
- Onboarding: the first investigation conducted to find out whether the customer complies with the institution's policies
- Event Driven Review: the process of re-examining the client due to certain signals that may indicate a change in the customer profile
- Periodic Review: the process of re-investigating the client at a frequent period to reassess the risk rating
- Exit: the process of terminating the relationship with the customer due to high or unacceptable risk
Risk Approaches and Classifications
- Risk ratings are assigned to customers based on the investigation and risk assessment
- Customers may be classified as high, medium, or low risk, or rejected if the risk is too high
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore the main work stream of Know Your Customer field, Customer Due Diligence (CDD). Learn about the role of a CDD analyst, workflows, types of investigations, and the structure of investigations. Get insights into CDD topics in this course.
