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.