Customer Due Diligence: What to Look For
Customer due diligence is all about knowing your customers. You want to gather enough information about them so that you can understand their patterns and typical account activity. That baseline, of sorts, can be valuable later on in helping you determine if certain activity is suspicious for that customer. The goal of all of this, of course, is to detect and prevent money laundering and terrorist financing and you should be able to identify and explain unusual transaction and other behavior that doesn’t make sense. So, what sort of things should you be looking for? Appendix F of the BSA/AML Examination Manual provides several examples of unusual activities that would warrant further due diligence and/or enhanced due diligence. A few examples include:
- A customer is reluctant to provide information needed to file a mandatory report, to have the report filed or to proceed with a transaction after being informed that the report must be filed.
- Loans that lack a legitimate business purpose.
- Receiving large and frequent deposits from on-line payments systems yet has no apparent on-line or auction business.
Kevin explains more in the video.
2025/02/05
Kevin Edwards
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them. Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).