The CDD process for asset managers, or Customer Due Diligence process, is a prominent topic in today's financial industry. It serves as a method to confirm customer identities and detect potential risks in accordance with current laws and regulations. These regulations ensure that financial institutions actively participate in the prevention of money laundering and terrorist financing. But what specific responsibility does an asset manager bear within the asset management CDD process? Find out in this blog.
Asset management risk assessment
An asset manager is a financial institution responsible for managing and investing its client's assets. Asset managers also have obligations related to the CDD process. These obligations are laid down in laws and regulations. Examples include the Money Laundering and Terrorist Financing Act (Wwft). The main duties of an asset manager in the CDD process are:
Identifying the customer:
-
An asset manager must establish the identity of its client. This can be done using valid identification such as a passport or driver's license. He must also record the customer's details such as name, address, and place of residence.
Risk Assessment:
-
An asset manager must identify the risks of its client. There are several indicators such as age, place of residence, occupation, previous (convictions) and relationships to politically exposed persons. On this basis, the asset manager can determine the client's risk level.
Continuous monitoring:
- An asset manager must constantly monitor the client and be alert for suspicious transactions. If suspicious activity occurs, he should report it to the loyalty authority.
File requirement:
- An asset manager has a file obligation. In it, he must record all information about the client and the relationship he has with the asset manager. This means that the asset manager must document all transactions, conversations, and agreements.
CDD policy:
- An asset manager must establish and maintain a CDD policy. This policy must comply with applicable laws and regulations and must be updated periodically.
In the CDD for asset management process, an asset manager plays an important role in preventing money laundering and terrorist financing. Asset managers verify the identity of their clients, conduct risk assessment, and conduct ongoing monitoring to detect suspicious activity. In addition, asset managers are required by laws and regulations to record all client information. This is done in a file and they must establish and maintain a CDD policy. It is therefore essential that asset managers ensure proper compliance with the CDD process in order to comply with government laws and regulations.
