Enaging in new business relationships is risky, because of the ultimate question that has to be addressed: ‘Is this person or company really who they say they are?’ In the business sector we need to take active steps to know our customers and the risks.
Customer Due Diligence or CDD is a form of a ‘Know Your Customer’ inventory in the literal sense of the word. It is the process where relevant information about the customer is collected and evaluated for potential risk for the organization or money laundering/terrorist financiang activities. CDD has to be performed when a business falling under the scope of a law or regulation, with regard to the Money Laundering and Terrorist Financing (Prevention) Act or equal European or American legislation, wants to enter into a relationship with a client or prospective client. This applies for both a one-off transaction and a long-term client-supplier relationship. In fact, this is a risk inventory and assessment in accordance with the guidelines in relevant legislation.
The SCOPE CDD solution helps you meet regulatory obligations, make informed decisions, and prevent your business being exposed to unnecessary risk.
This solution consists of various components, which can be used in a total integrated solution or as separate components.
With the SCOPE CDD Cloud solution clients can be screened and checked for high risk and red flags in order to identify potential risks. Clients can be screened for sanctions, PEP’s and negative presence in the media.
A full list of the risk indicators and red flags:
- Sanctions: Whether there are (or where previous) sanctions against this person or company
- Politically exposed: Whether this person or company is considered politically exposed
- Financial regulator: Whether this person or company is under financial regulation
- Disqualified director: Whether this person or company is/has a disqualified director
- Law enforcement: Whether this person or company is under law enforcement
- Adverse media: Whether there is adverse media associated with this person or company
All this data is gathered from renowned, reliable and up to date sources.
Country risk assessment
The SCOPE CDD Cloud solution assesses whether a person or company is in any way related to a high(er) risk country. A client can be related to countries in multiple ways: e.g. nationality, addresses, bank accounts and advisors. All related countries are checked against various risk indicators (e.g. FATF, CPI, FSI), ultimately resulting in a risk score per country.
For a complete risk assessment, the institution should look at characteristics of different types of customers, such as sectors or professions, products and ‘delivery channels’ (e.g. in person or otherwise, via intermediaries). Within the SCOPE CDD Cloud solution these variables can be mapped to a risk score. The weight assigned to each of these criteria in assessing the overall risk of money laundering and terrorist financing may vary from institution to institution and is therefore customizable.
All data and user actions are logged in a secure audit trail. This includes the outcome, performed checks, results per step, user and/or automated decisions, date, time and user. The SCOPE Cloud solution features a unique data model which allows you to look a client’s CDD assessment at any point in history.
The SCOPE CDD Cloud solution can be implemented in multiple ways, from a total integration solution to an API based solution.
SCOPE KYC & CDD Cloud Solution
The SCOPE CDD solution will integrate seamlessly within the SCOPE KYC solution (KYC is about safeguarding the quality of advice for the client within the framework of the Markets in Financial Instruments Directive (MiFid II) and the Markets in Financial Instruments Regulation (MiFIR). This enables an organization to reuse and compliment the client data already present from the Know Your Customer (KYC) intake.
SCOPE CDD Cloud Solution – standalone version
The SCOPE CDD Cloud Solution can also be used independently. All necessary data can be entered, either manually or through an import.
Seamless integration: SCOPE CDD Cloud API
It is possible to integrate the SCOPE CDD solution within an existing system. Data exchange and interaction with the CDD portal takes place through an API. The API makes it possible to complete actions in another system without leaving the preferred system. This enables a user to perform the CDD checks in an existing system (for example the preferred CRM software). Manual exceptions can be handled within the SCOPE CDD Cloud portal.
If you need or want more information about the SCOPE CDD solution, feel free to contact us.