Customer Due Diligence

Customer Due Diligence (CDD) also referred to as KYC (know your customer) arises from provisions in the Wft, Wwftand Sanctions Act and means that a company must have policies regarding customer due diligence and customer acceptance. Most of the Dutch provisions derive from the revised Fourth Anti-Money Laundering Directive (5AMLD), which was implemented in the Wwft in May 2020. CDD is now an indispensable part of sound business practice. Regulators are paying close attention to Customer Due Diligence (CDD) because the consequences of not managing the integrity risks of your clients can damage consumer confidence in the financial sector. 

CDD should be implemented to prevent a firm from accepting or serving clients (which in the case of investment institutions includes “participants”) that:

  1. May be related to money laundering;
  2. May be related to terrorist financing;
  3. Appear on a sanctions list/freeze list;
  4. Otherwise pose an integrity risk.

Components of CDD

CDD includes the components of:

  • client acceptance;
  • identification and verification of clients;
  • where applicable, the identification and, if applicable, verification of the beneficial owner;
  • establishing the purpose and intended nature of the business relationship;
  • monitoring and reviewing clients, accounts and transactions risk management.

These activities can be risk-based in nature. That is, the intensity of measures depends on the risk posed by a client. Different risk indicators can give rise to low or high risk. It is important for organisations to always make an individual assessment when determining risk.

Insight into CDD standards

The CDD policy you establish will be tailored to the size and nature of your business. With compliance software Ruler, you have at a glance an overview of which current (and future) CDD standards you need to comply with, so that your policy can be tailored accordingly. You can request a demo of Ruler to try it out for free:

Want to know more?

We are happy to help you with your customer due diligence. Please feel free to contact us for a no-obligation consultation.

Would you like to learn more about the Wwft, customer due diligence and transaction monitoring? Via our training institute, The Ministry of Compliance, we offer various AML/CFT e-learnings.