Client due diligence (CDD)

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Client due diligence (CDD) is a central pillar of the anti-money laundering (AML) and counter-terrorist financing (CTF) regime: the requirements for CDD underpin the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended.

Where the MLR 2017 apply (see Practice Note: Money Laundering Regulations 2017—scope and application—law firms), conducting CDD is an absolute requirement. It is not in itself subject to the risk-based approach. Certain components of CDD, however, allow for flexibility and positively require risk assessment.

What is CDD?

The component parts of CDD are:

  1. •

    identifying any client, unless the identity of that client is already known to you and has been verified by you

  2. •

    verifying that identity (unless the client's identity has already been verified by you), and

  3. •

    assessing, and where appropriate obtaining information on, the purpose and intended nature of the business relationship or occasional transaction

See further Practice Note: Money Laundering Regulations 2017—client due diligence—law firms.

When is CDD required?

You must apply CDD measures when you:

  1. •

    establish a business relationship

  2. •

    carry...

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