CDD refers to Customer Due Diligence, which involves what?

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Multiple Choice

CDD refers to Customer Due Diligence, which involves what?

CDD is the process of understanding who a customer is and the level of risk they pose to the bank, so the institution can apply the appropriate level of due diligence and ongoing monitoring. The focus is to assess risk factors such as customer type, geography, product or service used, and expected transaction activity, and then determine whether standard, simplified, or enhanced due diligence is needed. This risk assessment guides how closely the account is monitored over time and what controls are put in place. Onboarding and ongoing monitoring are important parts of an AML program, but the core purpose of CDD is evaluating and managing customer risk. Filing annual reports is not part of CDD.

CDD is the process of understanding who a customer is and the level of risk they pose to the bank, so the institution can apply the appropriate level of due diligence and ongoing monitoring. The focus is to assess risk factors such as customer type, geography, product or service used, and expected transaction activity, and then determine whether standard, simplified, or enhanced due diligence is needed. This risk assessment guides how closely the account is monitored over time and what controls are put in place. Onboarding and ongoing monitoring are important parts of an AML program, but the core purpose of CDD is evaluating and managing customer risk. Filing annual reports is not part of CDD.

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