In its most basic form, customer due diligence involves verifying the identity of a client and assessing the potential risks that they pose to the business. In order to build a complete picture of the customer, a business must perform background checks and other screening processes.
August 25th, 2022
ShareLove this blog? Why not share it with the world?
Know your customer (KYC) and customer due diligence (CDD) guidelines form an integral part of any financial service provider’s risk management practices. They’re also a legal requirement for any business that needs to comply with anti-money laundering (AML) laws.
In its most basic form, CDD involves verifying the identity of a client and assessing the potential risks that they pose to the business. In order to build a complete picture of the customer, a business must perform background checks and other screening processes. This way, they can ensure that the customer has been properly risk-assessed before they are allowed to open an account or access a service.
However, once the customer has been onboarded, the CDD process continues. This is because a business must continually assess the risk level that each customer poses.
To make the CDD process as seamless as possible, most businesses now enlist the help of dedicated customer due diligence solutions. With this in mind, let’s take a look at the benefits these solutions provide.
With the help of dedicated customer due diligence solutions, the risk assessment process is automated. As a result, it becomes more efficient and accurate.
In addition, these solutions have the ability to continually assess the risk level that a customer poses to your business. They can even alert you if anything changes.
Due to the efficiency provided by these solutions, they can also lower the cost of compliance and deliver consistent results that are free from human error.
On top of this, when you use a customer due diligence solution, you can screen customers quickly and accurately. This is because the solution will automatically screen your customers against sanctions lists and PEP watchlists, while also checking for negative news about the customer.
If the customer’s name shows up on a PEP watchlist, not only can the solution notify you of this, but it can also help you run enhanced due diligence checks that take the customer’s risk level into account. Again, this can be done quickly and simply.
By streamlining the onboarding process with the help of a customer due diligence solution, you can improve your conversion rates. Plus, by reducing the number of customer touchpoints, you can remove friction from the process while ensuring that you’re still meeting your compliance obligations.
All of this also means that the customer experience is improved. CDD and KYC processes are an essential part of AML regulations, but if they’re not implemented correctly and efficiently, then they can be incredibly cumbersome for customers. This, in turn, leads to low conversion rates and a number of customers dropping out of the process before they can open an account.
However, by limiting customer touchpoints, reducing friction, and speeding up the process, customer due diligence solutions improve the customer experience and boost conversion rates.
With the help of a customer due diligence solution, you can almost instantly verify the identity of customers with accuracy and confidence. This means you can streamline compliance with ever-changing KYC obligations and simplify the customer acquisition process.
On top of this, during the onboarding process, the solutions provide you with the ability to isolate high-risk customers and subject them to enhanced forms of due diligence to ensure you comply with AML regulatory requirements. By ensuring that not every customer is subjected to this more rigorous form of due diligence, you can save money and complete the onboarding process as swiftly as possible.
Similarly, with the help of a customer due diligence solution, you can also instantly authenticate identity documents from around the world. As fraudsters continue to try and duplicate these documents and create fraudulent copies, this is undoubtedly an important step in the process.
At Veriff, our solutions can help you carry out the due diligence process swiftly and securely, while also ensuring that you meet your KYC and AML obligations.
As a trusted customer due diligence vendor, we’ve ensured that our AML and KYC compliance solution offers everything you need for an efficient customer due diligence process.
As well as providing automated and accurate identity fraud prevention, it also screens customers against global sanctions and PEP watchlists, which are updated in real-time. It even checks for negative news and monitors your customers on an ongoing basis. With our help, you can show regulators that you take financial crime and compliance seriously.
Plus, our solutions also make it easy for honest people to become your customers. 98% of our checks are automated and verifications are approved in only 6 seconds. Similarly, 95% of customers are verified on the first try and we cover more than 10,000 government issued IDs from 190 countries. Due to this, as well as compliance, you can expect sky high conversion rates when you choose us as your customer due diligence vendor.
Interested in learning more about how our customer due diligence solutions can help your business meet its AML obligations? Speak with the due diligence experts at Veriff today.
As a market-leading customer due diligence vendor, we can help your business meet its obligations while also ensuring that your customers enjoy a frictionless onboarding experience. To discover more, simply provide us with a few basic details about your company and its needs. We’ll then provide you with a personalized demonstration that shows exactly what Veriff can do for you.
EDD in banking involves gathering information in order to verify the identity of customers and calculate the exact level of money laundering risk each customer poses. During the EDD process, the customer is asked for a much greater amount of information than they are during the CDD process, as this information can be used to mitigate the risks involved.
When carrying out due diligence, a financial institution must determine whether they should perform customer due diligence (CDD) or enhanced due diligence (EDD). This is because FATF guidance suggests that companies should adopt a risk-based approach to due diligence that reflects the specific level of risk that each individual customer presents.
Synthetic fraud is incredibly dangerous and is a major problem facing the financial sector. Unlike third-party fraud, where an entire identity is stolen and used to defraud enterprises and victims, synthetic fraud frequently has no specific consumer victim.