Government focus is moving towards punishment of senior management for failures of oversight.


Can you take the risk of fatal weaknesses in your CDD processes?


Public Data vs Private Understanding

We’re witnessing a welcome revolution in CDD and KYC as ‘smart’ new tools start to digitise and de-manualize the ‘Public Data’ aspects of the onboarding process – the seamless collation of ID documents, certificates of incorporation, register entries, annual accounts, global blacklists and adverse media.

But this won’t give you the full picture. To satisfy your regulators and correspondent partners that your CDD is strong and reliable, you must be able to demonstrate that your institution also has a ‘Private Understanding’ of each customer - who they really are, how they came by their money and why they want to use your services.

CDD Training and Guidance alone are not enough

Firms have traditionally relied upon training and guidance to impress upon frontline staff the importance of developing this private understanding of the customer. However, in practice this is rarely enough and many front liners aren’t very good at it. The stats vary but some studies show that many people will forget 90% of what they’ve learned in formal training programme within a month, unless it is reinforced on a regular basis. In digital onboarding models, customers who are completing online forms don’t get any training at all of course and .will simply have to do the best they can with the online form they are completing.

The Solution is CDDPro

CDDPro is an intuitive, easy-to-use tool that reinforces your training by guiding RMs and customers through the onboarding process. Working seamlessly within or alongside your existing systems, CDDPro helps produce high quality CDD forms that your second line Compliance approvers, central bank inspectors and correspondent banks will love. Part real-time form checker, and part online assistant, it uses NLP generated tips and guidance to help RMs and customers get the most out of onboarding interactions by asking the right questions at the right time and by responding to inadequate information in real time.

CDDPro can eliminate errors and shortcomings which would otherwise have to be dealt with by a Compliance approver who, frankly, could and should be doing better things…

And it can also score your submitted onboarding forms, helping you implement appraisal and remuneration policies which incentivize frontliners to improve CDD onboarding quality and allowing you to start collecting large pools of customer answer types for onward AML risk analysis.

Examples

Every week around the world, hundreds of thousands of CDD forms (whether manual or digital) are returned or rejected by Compliance KYC teams because they’re not fit for purpose. Many more aren’t returned because there aren’t the resources to spot them or because they otherwise slip through an imperfect net. And so, every year, regulators issue adverse findings and penalties against banks, and correspondents terminate respondent relationships, due to poor CDD.

Typically, the shortfalls identified in the onboarding records relate to one or more of the following quality categories.

Completeness

Initial information at the point of capture is too scant and lacking in sufficient detail to contribute anything to the money laundering risk assessment of that client. For example, the nature of the client’s business being stated as “consulting” or full ownership details being unclear. In some instances, key fields such as countries of operation or relationships with other banks are left completely blank Visit to our Demo Page to watch examples of how CDDPro can help eliminate these errors.

Consistency

Different pieces of information provided at the point of capture conflict with each other, with the result that it is unclear which should be incorporated in the risk assessment and/or which creates a general impression of organizational incompetence. For example, information provided by the onboarder or the client states that the client “does not do business with any sanctioned country”, yet elsewhere it states that one of its major suppliers is located in…..a sanctioned country. Or the stated annual expected profit is substantially greater than the sum of the monthly differences between expected revenues and costs. On our Demo Page, you can see how CDDPro can help to prevent consistency errors of this type. Visit to our Demo Page to watch.

Relevance

Information provided at onboarding simply isn’t relevant to the question being asked or doesn’t deal with it in a meaningful way. For example, the client’s Source of Wealth being described as “Savings” or the Purpose of the Account being described as “Business requirements.” To see how CDDPro can help improve answer quality on such issues, Visit to our Demo Page.

Credibility

Answers and information which lack credibility or which otherwise ought reasonably to have generated further questions and clarification - or at least some kind of alert to the 2nd line KYC team. For example, a business with a single employee and a business address in a flexi-office building being said to expect annual revenues in excess of $10m, or a client’s home address being given as ‘c/o the Ramara Hotel, Downtown.” By visiting to our Demo Page, you can see for yourself how CDDPro can help improve CDD onboarding quality in these areas.

It shouldn’t be your KYC teams spotting and fixing these kinds of errors – let CDDPro do it for them.

Our Team

Tim Parkman

Tim Parkman is a lawyer, compliance officer and MLRO with 25 years of experience in countering financial crime, initially with the Standard Chartered Group and then as managing director of training and consulting company Lessons Learned Ltd. A graduate in Psychology and Philosophy from Oxford University, Tim is a member of the EBRD’s panel of experts on Money Laundering and Terrorist Financing and the author of “Countering Terrorist Finance: A Training Handbook for Financial Services” (Ashgate) and “Mastering Anti-Money Laundering and Counter-Terrorist Financing ” (Financial Times Publishing), the 2nd edition of which was published in November 2019

Stuart Hammond

Stuart Hammond has extensive financial crime experience in both the public and private sectors. He has held senior financial crime compliance roles regionally and globally with Standard Chartered Bank, Aviva and HBOS. He has extensive experience in writing Global CDD procedures and working with front end businesses to ensure their practical, consistent and effective implementation in numerous jurisdictions. He also consults widely with financial institutions in the UK, Europe and Asia in reviewing and enhancing the full spectrum of their financial crime policies and standards and providing guidance on their implementation.

Lawrence Hunt

Lawrence is a British born entrepreneur with 30 years of experience, building software and technology businesses in banking and various industries. Lawrence was at the forefront of each of the technology revolutions since the 1980’s, working with some of the world’s leading tech businesses and individuals. Lawrence is one of the founders, A series investors and a director of CDDPro Ltd and is responsible for the technology and marketing strategies.

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