Ongoing Customer Due Diligence: When and How to Review
Customer due diligence is not a "set and forget" exercise. Your AML/CTF obligations continue throughout the relationship. This guide explains when and how to conduct ongoing CDD.
What is ongoing CDD?
Ongoing customer due diligence means continuously monitoring and reviewing your client relationships after the initial CDD is complete. Under Section 36, you must:
- Monitor transactions for consistency with client profile
- Keep customer information up to date
- Re-verify identity when doubts arise
- Adjust risk ratings when circumstances change
Triggers for re-verification
Event-based triggers
- Client changes address, name or contact details
- Client's business structure changes
- Beneficial ownership changes
- Unusual or unexpected transaction patterns
- Client becomes a PEP or associate of a PEP
- Doubts about previously obtained information
Time-based triggers
- High-risk clients: Review at least annually
- Medium-risk clients: Review every 2-3 years
- Low-risk clients: Review every 3-5 years or upon new engagement
- At the commencement of each new matter/engagement
What to review
Annual review checklist
- Identity verification still valid? Check ID documents have not expired
- Contact details current? Confirm address, email and phone
- Beneficial ownership unchanged? Verify no changes to ownership structure
- PEP status? Re-screen for PEP and sanctions
- Risk rating appropriate? Has anything changed that affects risk?
- Transaction patterns normal? Review for unusual activity
Transaction monitoring
Under Section 36, you must monitor transactions to ensure they are consistent with:
- Your knowledge of the client
- Their business and risk profile
- Their source of funds
Proportionate monitoring
The level of monitoring should match the risk. A high-risk client with complex transactions needs more scrutiny than a low-risk client with simple, predictable transactions.
Documentation
Record all ongoing CDD activities:
- When reviews were conducted
- What was reviewed
- Any changes identified
- Actions taken (updated records, adjusted risk rating etc.)
- Who conducted the review
Key Takeaway
Ongoing CDD is continuous throughout the client relationship. Review high-risk clients annually, monitor transactions for unusual patterns and re-verify when circumstances change. Document all reviews and actions taken.
Read our complete Tranche 2 Guide
Key dates, affected sectors, obligations and how to prepare
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