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Importance of Due Diligence

Importance of Due Diligence

Importance of Due Diligence

  Have you ever wondered why getting detailed information about your customer is so important..?! In this article, you will know why!! Many businesses are losing money because of fraud and fake customers. The only solution is the due diligence. So let us talk about it.

First and foremost, your customer can ruin your career by money laundering, preventing liability and many other ways. Not only Companies lose money from this but also banks. If the source of the money is illegal, people may use it for money laundering tactics to make these illegally obtained funds legal.

However, everything has a solution. Companies and banks must search for the customer details and know well about him in a detailed way. They must search about: his name, birth date, address, Identification number and even his photograph.

What is Customer Due Diligence?

Customer Due Diligence (CDD) is the fact of collecting the complete data about someone from his name to his relationships. 

There are three levels:

  • Simplified Due Diligence: is the simplest set of information that somebody can collect about his customer, he has a low (almost non-existent) risk.
  • Standard Due Diligence: is the most used level; it is when we have to collect more data about a person. In this case, the person may have a medium risk of money laundering.
  • Enhanced Due Diligence: is when a customer has a high risk of money laundering, therefore we have to collect a lot more information. For example:
    • Search for evidence about his identity
    • His business relationships
    • Location of his business
    • Question a third party about him
    • Type of his payments
    • Nature of his work

Be careful

The more you collect information, the more you make sure you are in the safe side. Do not hesitate to contact us if you need any further help..!

Hope you enjoyed reading 😉

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