The importance of effective and meaningful customer due diligence (CDD)

Written by Dave Robson on Friday August 14, 2015

The profile of money laundering and terrorist financing risk has seen exponential growth, and the stakes have never been higher. The arena has developed far beyond the fundamental legal and regulatory requirements into a global framework where the media, the public and shareholders/markets have all taken an active interest in the way major institutions are managing these risks.

The legal and regulatory ramifications are common knowledge and incredibly impactful, but there is also an increasing recognition of moral and social responsibility – you mustn’t be the firm that facilitated money launderers or terrorist financers, knowing the horrific consequences their actions can have.

Culture and training are now a key focus, with firms recognising that the financial crime nettle needs to be grasped. Prevention is better than cure, but cure is better than enforcement. In order to know your business, you really must know your customers.

This has of course meant commensurate growth of the CDD focused anti-money laundering and counter-terrorist financing (AML/CTF) professional, with a buoyant demand for both embedded staff and remediation contractors in the UK and other major international centres. Risk conscious firms need knowledgeable, well-trained employees. In turn, knowledgeable and well-trained professionals command strong salaries in the current market. This virtuous circle was missing just one element – how can you develop, validate and certify your CDD knowledge?

“It’s vital that client onboarding teams and customer-facing staff don’t take a ‘tick box’ approach to CDD and this course provides strategies and a practical toolkit to ensure CDD is done in a meaningful and effective way. It is the only professional qualification in practical CDD. ”

– Bill Howarth, Chief Executive, International Compliance Association (ICA)

ICA has identified this gap and created an innovative and recognised qualification designed specifically to disseminate, underpin and demonstrate understanding of best practice in the practical approach to robust CDD.

There are two words Bill Howarth used which have particular resonance – “meaningful” and “effective”.

This sums it up very neatly and reflects the “modern” attitude: CDD is not simply about complying with requirements.

It’s not about photocopying a passport because your procedure tells you to, or writing ‘inheritance’ as Source of Funds, because you can’t leave it blank. It’s about unravelling corporate structures and determining beneficial owners, ensuring you:

  • understand the value of the information you have available
  • know what you can (and can’t) do with the information you hold
  • are able to recognise what is missing
  • can consider where you might need to go next
  • can build up a true picture of the relationship; and ultimately
  • are confident to interpret the risk around it.
  • This is very much the philosophy of the new ICA Advanced Certificate in Practical CDD.

As you would expect from an ICA qualification, the concepts of the CDD process are of course addressed. Contextual AML/CFT understanding is obviously important, but focus – particularly in the workshops – is firmly on the hands-on approach to CDD and how this is a conduit to successful risk management.

After all, successful CDD leads to successful relationships, which lead to a successful business.

If you would like to learn more about the brand new, market leading ICA Advanced Certificate in Practical CDD, details can be found here:

This blog originally appeared on the BBA website.

If you’re interested in an ICA qualification, view all courses in AML, governance, risk and compliance and financial crime prevention here. You can find out more about all our courses at a free ICA briefing session, find out more here.

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