Customer Due Diligence (CDD) is indispensable for financial companies. Consumers, enterprises and other stakeholders may lose their trust in the company when it fails to apply ethical policies. Ethical policies start with compliance with the applicable legislation and regulations.

Also read: What is Customer Due Diligence?

New customer relationships

The financial world is always in motion. With fewer personal contacts, more complex products, a growing tangle of money flows and the latest digital means, there is a lot that requires monitoring. As a financial service provider, you should therefore exercise due care when entering into new customer relationships and be well informed of your customer and the risks involved.

Avoid the risk of hefty fines

CDD is the process during which relevant information about the existing or new customer is collected and then assessed for potential risks within the context of the Money Laundering and Terrorist Financing (Prevention) Act (Dutch Wwft). This Act is aimed at preventing money laundering and terrorist financing. Money laundering means that illegally obtained assets are made legal by means of obscuring their origin. Terrorist financing occurs when assets are used to make terrorist activities possible. To ensure that you do not run any risks when it comes to these illegal practices, you have to carry out the CDD process. This way you will avoid having to pay hefty fines.

Prevent reputational damage

Furthermore, CDD is important for maintaining the trust in your company and preventing reputational damage. If you start doing business with the wrong person, this may be detrimental to your company. Once you have sustained reputational damage, it may be difficult to regain the lost ground. You can easily prevent this by carrying out the CDD process.

The SCOPE CDD Cloud Solution is a perfect system that helps you run the necessary checks. If you want to know more about this system and why it can help you save time and money and prevent unnecessary exposure to risks, click here.