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What Is Customer Due Diligence And What Is Its Importance?


Engaging in a new business relationship is risky for businesses when we live in a world of

Frauds

Impersonation It is naturally difficult for banks to ascertain your claim of being who you say you are before they hand you over the money. In business terms, this process is more commonly known as ‘Customer Due Diligence’.

Money Laundering

Terrorism


For businesses, there is a sophisticated process developed to verify your identity called Customer Due Diligence.

Due diligence is an act of performing background checks on the customer to ensure that they are properly risk assessed before being on-boarded.

Customer Due Diligence enables an organization to evaluate the extent to which the customer exposes it to a range of risks.


WHEN SHOULD BUSINESSES CARRY OUT CUSTOMER DUE DILIGENCE?

Due diligence, as we know, is an audit of a potential investment or product to confirm all facts, that might include the review of financial records.

Most companies research before entering into an agreement or a financial transaction. with another party for the following reasons:


Entering A New Business Deal

In The Case Of Infrequent Dealings

Companies must perform thorough due diligence prior to establishing a business relationship in order to ensure the customer matches their risk profile and isn’t using a false identity.

Certain transactions which include dealings where an amount over a certain threshold is involved or when the entities are located in high-risk foreign nations.


When Suspecting Money Laundering

When The Documentation Is Not Reliable

If a customer is suspected of money laundering or financing terrorism, companies must implement CDD checks.

When the identification documents that the customer has furnished are either unreliable or inadequate, companies should apply further CDD investigation.


LEVELS OF CUSTOMER DUE DILIGENCE

1

When Suspecting Money Laundering

This is the lowest level of due diligence that can be completed on a customer who does not always pose a high risk to the organization.

The customers have less probability of being involved in money laundering or terrorist financing.


2

Enhanced Due Diligence

Enhanced Due Diligence or EDD is required when a customer is perceived to be at a higher risk to the company.

A high-risk situation also occurs where there is an increased opportunity for money laundering or terrorist financing through the service or product you are providing.


If you are thinking of onboarding a new customer or want to acquire another small business or you simply want to add new suppliers to your business, CRIF can perform the right Customer Due Diligence for you!

https://campaigns.crifhighmark.com/BusinessInformation

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What is customer due diligence and what is its importance  

Due diligence is an act of performing background checks on the customer to ensure that they are properly risk assessed before being on-board...

What is customer due diligence and what is its importance  

Due diligence is an act of performing background checks on the customer to ensure that they are properly risk assessed before being on-board...