Customer Due Diligence (CDD)
Customer Due Diligence (CDD) is your first line of defence when it comes to preventing financial crime. It’s more than a legal requirement – it’s a vital part of protecting your reputation, building trust with your clients, and ensuring your business isn’t exposed to unnecessary risk. Strategi provides practical, tailored CDD advice and support for Phase 1 and Phase 2 reporting entities, including financial advice providers, lawyers, accountants, and real estate agents. We help businesses meet their CDD obligations confidently and cost-effectively.
What is CDD and why does it matter?
Customer Due Diligence involves collecting and verifying key information about your customers to:
- Understand who they are and how they operate
- Assess their risk level
- Monitor for any suspicious activity
When done well, CDD allows you to identify unusual behaviour early, avoid reputational damage, and stay compliant with AML/CFT regulations.
The three pillars of good CDD
We break effective CDD down into three core steps:
- Understand your customer
Gather and verify customer details such as name, date of birth, address, business activity, ownership structure, and source of funds. The goal is to build a complete profile that serves as a reference point for ongoing monitoring. - Assess their risk
Assign a risk level based on relevant factors including country of origin, industry, customer type (e.g. trust or individual), and transaction patterns. Higher-risk customers require Enhanced Due Diligence (EDD). - Detect and respond to suspicious activity
Monitor transactions and customer behaviour over time. If something doesn’t align with the expected profile, it could be a red flag. Early detection allows you to act swiftly and report appropriately.
Our CDD services
Strategi can assist with all aspects of Customer Due Diligence, including:
- Drafting or reviewing your CDD policies and procedures
- Delivering staff training through Radar (online), Zoom, or in-person
- Advising on how to identify and escalate red flags
- Supporting your risk assessment framework
- Helping you manage CDD exceptions appropriately
We also provide support around:
- Beneficial ownership identification
- Source of wealth/funds verification
- Simplified Due Diligence (SDD) for low-risk customers
- Enhanced Due Diligence (EDD) for high-risk customers
CDD exceptions
In some cases, it may not be possible to complete all steps of the CDD process. This might include customers without standard ID documents or emergency situations.
Strategi helps you:
- Establish and maintain an exceptions register
- Conduct and document a thorough risk assessment
- Ensure appropriate senior manager sign-off is in place
It’s important to note that under Enhanced CDD, no exceptions are permitted.
Ongoing due diligence
CDD doesn’t stop once the customer is onboarded. We help you implement ongoing due diligence processes to:
- Keep customer profiles up to date
- Review risk levels periodically
- Monitor for unusual transactions or changes in behaviour
- Stay on top of regulatory changes
Staff training and support
Everyone involved in the CDD process should know their role and what to look for. Strategi delivers practical, role-specific training to ensure your team understands CDD expectations and knows how to spot and escalate suspicious activity.
Get CDD right with Strategi
If your current approach to Customer Due Diligence needs a review, or you’re unsure whether your process meets the AML/CFT requirements, we can help. Contact our team today for support, templates, and training to strengthen your CDD programme.