Customer Due Diligence Requirements

Introduction

The following article outlines the customer due diligence (CDD) requirements for monitoring entities, as per regulations related to anti-money laundering (AML) and combating the financing of terrorism (CFT). These requirements aim to prevent money laundering and terrorist financing by ensuring that customers are properly identified and verified.

Key Points

Identification and Verification

• Monitoring entities must identify and verify customers using various methods, such as:
  • Comparing information with government records
  • Obtaining information from media or official publications
  • Confirming dates of birth and permanent addresses
• These measures are essential to ensure that customers are who they claim to be and to prevent identity theft.

Ongoing Due Diligence

• Entities must conduct ongoing due diligence on business relationships, including:
  • Scrutinizing transactions to ensure they are consistent with the customer’s profile and risk assessment
  • Monitoring changes in customer behavior or activity that may indicate a higher risk of money laundering or terrorist financing
• This ongoing due diligence helps entities stay alert to potential risks and take prompt action if necessary.

Enhanced Due Diligence

• Higher-risk categories, such as:
  • Non-resident customers
  • Trusts
  • Companies with nominee shareholders
  • Correspondent banking relationships
• Require enhanced due diligence measures, including:
  • Verification of accounts and business relationships
  • Clarification of transaction purposes
  • Obtaining more precise information about customers and beneficial owners
• These measures are designed to provide an additional layer of protection against money laundering and terrorist financing.

Simplified CDD Measures

• Entities can apply simplified CDD measures for low-risk customers, such as:
  • Checking identity documents against government records
  • Using electronic identification methods
• These measures aim to reduce the administrative burden on entities while still maintaining an adequate level of due diligence.

Reporting Requirements

• If an entity is unable to identify or verify a customer or has doubts about the veracity of obtained data, it must:
  • Not open an account or perform transactions
  • Report to the financial monitoring organ

Specific Requirements for Certain Customers

Natural and Legal Persons Involved in Purchase and Sale of Precious Stones, Metals, or Jewelry

• Entities must conduct enhanced due diligence on these customers, including verification of accounts and business relationships.

Entities Providing Intermediary Services on Real Estate Purchases and Sales

• Entities must conduct enhanced due diligence on these customers, including clarification of transaction purposes and obtaining more precise information about customers and beneficial owners.

Conclusion

The customer due diligence requirements outlined in this article provide a comprehensive framework for monitoring entities to prevent money laundering and terrorist financing. By following these guidelines, entities can ensure that they are properly identifying and verifying customers, conducting ongoing due diligence, and taking enhanced measures for higher-risk categories.