Podcast
Questions and Answers
Customer Due Diligence is a key aspect of the Know Your Customer workfield.
Customer Due Diligence is a key aspect of the Know Your Customer workfield.
True (A)
Transaction Monitoring is covered in the same course as Customer Due Diligence.
Transaction Monitoring is covered in the same course as Customer Due Diligence.
False (B)
CDD analysts are primarily responsible for investigating money laundering activities.
CDD analysts are primarily responsible for investigating money laundering activities.
False (B)
The purpose of CDD investigation is to provide a risk rating only for high-risk customers.
The purpose of CDD investigation is to provide a risk rating only for high-risk customers.
Law firms are not among the institutions subject to Act on the prevention of money laundering and financing of terrorism.
Law firms are not among the institutions subject to Act on the prevention of money laundering and financing of terrorism.
The CDD process focuses on identifying and verifying the customer, as well as understanding how products and services are used.
The CDD process focuses on identifying and verifying the customer, as well as understanding how products and services are used.
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
A computer store operating only in the Netherlands and not cash-intensive would typically undergo an enhanced Due Diligence investigation.
A computer store operating only in the Netherlands and not cash-intensive would typically undergo an enhanced Due Diligence investigation.
Enhanced Due Diligence investigations are conducted on clients who present a higher risk of money laundering, terrorist financing, or other integrity risks.
Enhanced Due Diligence investigations are conducted on clients who present a higher risk of money laundering, terrorist financing, or other integrity risks.
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
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.
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.
The CDD analyst is responsible for investigating customer information and communicating with stakeholders.
The CDD analyst is responsible for investigating customer information and communicating with stakeholders.
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
Onboarding is the first step where a customer is investigated to check if they comply with institution policies.
Onboarding is the first step where a customer is investigated to check if they comply with institution policies.
Event Driven Review only occurs when there is an increased risk identified in a customer profile.
Event Driven Review only occurs when there is an increased risk identified in a customer profile.
Simple, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
Simple, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
CARC stands for Customer Assessment and Risk Classification.
CARC stands for Customer Assessment and Risk Classification.
In Periodic Review, clients are not re-investigated after the initial onboarding process.
In Periodic Review, clients are not re-investigated after the initial onboarding process.
Transaction Monitoring cannot initiate an Event Driven Review in Customer Due Diligence.
Transaction Monitoring cannot initiate an Event Driven Review in Customer Due Diligence.
An internal colleague, like a relationship manager, cannot trigger an Event Driven Review based on changes observed in a customer's profile.
An internal colleague, like a relationship manager, cannot trigger an Event Driven Review based on changes observed in a customer's profile.
Customer exit involves a more extensive department compared to other work streams in Customer Due Diligence.
Customer exit involves a more extensive department compared to other work streams in Customer Due Diligence.
During a simplified client due diligence process, it is not necessary to investigate the origin of the client's assets.
During a simplified client due diligence process, it is not necessary to investigate the origin of the client's assets.
An oil storage, transport company with operations in Europe, North Africa, and Asia would typically undergo a standard Due Diligence investigation.
An oil storage, transport company with operations in Europe, North Africa, and Asia would typically undergo a standard Due Diligence investigation.
Enhanced Due Diligence investigations focus on clients with low risks of money laundering or terrorist financing.
Enhanced Due Diligence investigations focus on clients with low risks of money laundering or terrorist financing.
A simplified client due diligence process aims to increase administrative burdens for both the institution and the client.
A simplified client due diligence process aims to increase administrative burdens for both the institution and the client.
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
Customer exit involves a less extensive department compared to other work streams in Customer Due Diligence.
Customer exit involves a less extensive department compared to other work streams in Customer Due Diligence.
The main work streams in the Know Your Customer workfield are Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).
The main work streams in the Know Your Customer workfield are Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD).
CDD investigations are only required for financial institutions such as banks and insurance companies.
CDD investigations are only required for financial institutions such as banks and insurance companies.
Enhanced Due Diligence (EDD) investigations are conducted on all customers of mandatory institutions.
Enhanced Due Diligence (EDD) investigations are conducted on all customers of mandatory institutions.
The primary goal of the CDD analyst is to provide risk ratings for all customers of an institution.
The primary goal of the CDD analyst is to provide risk ratings for all customers of an institution.
Transaction Monitoring can initiate an Event Driven Review based on detected changes in a customer's profile.
Transaction Monitoring can initiate an Event Driven Review based on detected changes in a customer's profile.
Simplified, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
Simplified, Standard, and Enhanced Due Diligence are the three types of investigations conducted in Customer Due Diligence.
During the Periodic Review, clients are thoroughly investigated again in a frequent period by default.
During the Periodic Review, clients are thoroughly investigated again in a frequent period by default.
Event Driven Review can be triggered by signals such as changes in a customer's organizational structure.
Event Driven Review can be triggered by signals such as changes in a customer's organizational structure.
CDD analysts are primarily responsible for investigating money laundering activities.
CDD analysts are primarily responsible for investigating money laundering activities.
Enhanced Due Diligence investigations are conducted on clients presenting simple integrity risks.
Enhanced Due Diligence investigations are conducted on clients presenting simple integrity risks.
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
The primary goal of the CDD analyst is to ignore risks and proceed with transactions regardless.
Client exit involves a smaller department compared to other work streams in Customer Due Diligence.
Client exit involves a smaller department compared to other work streams in Customer Due Diligence.
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
Simplified client due diligence is a comprehensive process that involves heavy investigation to identify and verify the client.
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
During heightened scrutiny, additional measures are taken to fully verify the customer and identify the origin and destination of money flows.
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
Transaction Monitoring can initiate an Event Driven Review in Customer Due Diligence.
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
The purpose of a simplified examination is to impose more administrative burdens on both the anti-money laundering obligated institution and the client.
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
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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.
