Financial Crime World

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Customer Due Diligence (CDD) and Enhanced CDD: Preventing Financial Crimes

General Requirements for CDD

To prevent financial crimes such as money laundering and terrorist financing, licensees must obtain identification data from all customers and beneficial owners. This information must be verified through transparent means or other commercial enquiries.

  • Obtain identification data from all customers and beneficial owners
  • Verify this information through transparent means or other commercial enquiries
  • Establish the identity of settlor(s), trustee(s), and beneficiaries in the case of trusts

Enhanced CDD: A Higher Standard for Riskier Customers

Enhanced Customer Due Diligence (CDD) is required for customers with a higher risk profile. Licensees must examine the background and purpose of complex transactions and unusual patterns of transactions, and increase monitoring to determine if these transactions appear suspicious.

  • Enhanced CDD is required for customers with a higher risk profile
  • Examine the background and purpose of complex transactions and unusual patterns of transactions
  • Increase monitoring to determine if these transactions appear suspicious

Specific Measures for Enhanced CDD

To conduct enhanced CDD, licensees must obtain additional information on the customer, such as occupation, volume of assets, or public databases. They must also obtain additional information on the intended nature of the business relationship and verify the first payment in an account using Risk-Based Approach (RBA).

  • Obtain additional information on the customer, such as:
    • Occupation
    • Volume of assets
    • Public databases
  • Obtain additional information on the intended nature of the business relationship
  • Verify the first payment in an account using Risk-Based Approach (RBA)
  • Obtain evidence of permanent address, personal references, or documents outlining source of wealth/income

Additional Requirements for Enhanced CDD

For non-resident, non-GCC national account holders, additional enhanced due diligence measures include references from a regulated bank in a FATF country, certified copies of bank statements for 3 months, or references from a known customer. Enhanced CDD is also required for customers who are politically exposed persons (PEPs) or have connections to PEPs.

  • For non-resident, non-GCC national account holders:
    • References from a regulated bank in a FATF country
    • Certified copies of bank statements for 3 months
    • References from a known customer
  • Enhanced CDD is also required for customers who are PEPs or have connections to PEPs

These measures highlight the importance of Customer Due Diligence and Enhanced CDD in preventing financial crimes like money laundering and terrorist financing.