Guide

Customer Due Diligence – CDD

Check your customers. With Roaring's APIs, web app and monitoring services, you can perform customer due diligence in a simple and smooth manner.

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Customer Due Diligence in short

CDD, Customer Due Diligence, Client Due Diligence, Customer Knowledge, and KYC. There are many ways to address the process when it comes to having the right information about one's customers and potential customers. To ensure compliance with the Anti-Money Laundering Act, you need to collect and verify information about your customers, keep this information updated regularly, and have processes and routines for your work against money laundering.

According to the Financial Supervisory Authority, companies that fall under the scope of the Anti-Money Laundering Act must have a good knowledge of their customers and their businesses in order to make it difficult and prevent the business from being used for money laundering or financing of terrorism.

This applies, among others, to companies in industries such as banking, finance, trading in electronic currencies, payment institutions, and insurance. However, for some years now, this also includes industries such as accounting, auditing, real estate agents, gaming companies, and more.

What does a customer due diligence contain?

To meet the requirements for customer knowledge, there are some standard checks that must be carried out:

Verification of the customer's identity
Beneficial owners
PEP (Politically Exposed Person)
Sanction lists
Domicile (take extra measures if the company is registered in a high-risk country)
Purpose and nature of the business relationship / Know Your Customer

All of this can be checked directly in Roaring’s platform along with much more that may be of interest during a customer knowledge check. Depending on the industry you are in and the type of business you operate, best practices for KYC may vary somewhat. It's important to create a framework for your risk assessment and routines for how your customer due diligence process should be handled.

In broad terms, any risks associated with the business relationship should be investigated and documented regularly. This means checking the company and its representatives, related companies, and, if necessary, relationships.

Red flags

Any red flags that appear during a customer knowledge check should be further investigated carefully before deciding whether to initiate or continue the business relationship. This can vary between industries and operations, but some common warning flags to watch out for during a CDD check include:

The customer's submitted information does not match the data in the check.
The ownership structure is unclear or contains foreign individuals and/or companies.
Lack of registered beneficial owners.
The company's representatives are on PEP or sanction lists.
The company's representatives are involved in other companies deemed high risk.
The company's industry is particularly exposed to money laundering risks, e.g., trading in cryptocurrencies or betting.
The company's operations involve cash handling.

It's important to be vigilant and attentive to your customer's information and behaviors to avoid unnecessary risk.

"With Roaring's monitoring service we can continously update our data, which has made the AML process more efficient."

Patrik Jeppsson, Söderberg & Partners
"We can now collect all the information we require behind the scenes, enabling controls and risk analysis based on real-time customer data."

Amalia Lundin, PE Accounting
"Going from a manual process into full automation using data has improved the customer experience significantly."

Jenny Sjövall, SPP