Initial customer due diligence
AUSTRAC describes CDD as understanding customers before providing designated services and throughout the business relationship, using identification, verification and monitoring.
Last reviewed: · Editorial owner: Onboard Australia
General editorial information. Onboard is a domain portfolio and does not provide AML/CTF software or advice.
Initial CDD is concerned with establishing the customer and specified related persons, understanding the relationship or transaction, identifying customer ML/TF risk and collecting and verifying information appropriate to that risk.
The path depends on the customer type. Individuals, companies, trusts and other arrangements can require different information, including representatives and beneficial owners where applicable.
An onboarding system can collect information, connect to verification services and record review outcomes. The reporting entity still needs policies defining what it collects and verifies, when it escalates and how it establishes required matters.
Initial CDD is part of a wider lifecycle. Ongoing monitoring, updated information and enhanced measures may become relevant according to the applicable obligations and customer risk.
Illustrative workflow
Illustrative workflow only — not a compliance template. The required process depends on the reporting entity, designated service, customer and risk.
Capture customer and relationship information appropriate to the customer type.
Identify the customer’s ML/TF risk under the reporting entity’s approach.
Use reliable and independent data appropriate to the circumstances and risk.
Investigate mismatches, exceptions and higher-review cases.
Keep the information and reasoning needed to evidence the decision.
Questions
Regulatory statements are linked to current AUSTRAC guidance. Provider facts on the market page link to each provider’s official website.