Customer identification program (CIP)
Financial institutions must verify customers' identities before allowing them to open an account.
The customer should provide at least:
Once a customer has delivered this data, they must supply the company with a government-issued identity document to prove these records.
The institution can verify the accuracy of this document by checking with third-party databases.
The latest KYC guidance says that financial and credit businesses must perform a biometric authentication to verify whether the person providing the data is the identity owner rather than a fraudster who stole that information.
Customer due diligence
Following the CIP guidelines come customer due diligence checks.
There are three possible levels:
- Simplified due diligence (SDD)
- Customer due diligence (CDD)
- Enhanced due diligence (EDD)
Each of these types of due diligence is more demanding than the previous. While simplified due diligence procedures are for quite low-risk customers, enhanced due diligence procedures are usually employed for extremely high-risk customers, such as politically exposed persons (PEP) or someone subject to sanctions.
Using the provided data, financial and credit institutions can categorize customers' risks before digitally storing the records. Preserving records of CDD and EDD checks conducted on each customer is crucial in case of a regulatory audit.
Once due diligence has been carried out, and the company is fully conscious of the customer's risk level, they can be onboarded (or denied if the risk level is too high).
Streamline the customer onboarding process with Vespia
Here at Vespia, we have designed a class-leading KYB, AML, and KYC compliance solution that allows you to show regulators that you take financial crime and compliance seriously.
It is an easy and user-friendly solution that helps you confirm the identity of your customer using only basic information and a quick selfie.
We also perform PEP and sanctions screening and adverse media checks, which may reveal predicate offences. Additionally, we offer transaction monitoring, tailored questionnaires, and additional document requests to help you make a decision about your business customer, investor, supplier or partner fast.
Book a demo to get more information about our AML and business KYC solutions.
