When to Check

To help prevent the risk of money laundering and terrorist financing, due diligence should be completed before entering into a business relationship with a customer, or an occasional transaction takes place.

Once your customer has been identified and verified, the due diligence is usually reviewed on a periodic basis. The length of time between reviews is generally based on the risk rating assigned to the customer or when a trigger event occurs.

Potential trigger events could include:

  • The product or service that you supply to the customer changes.
  • Concerns are raised regarding previous information collected and its validity.
  • Suspicions of money laundering are raised.

Your approach to due diligence should not stand still — ongoing monitoring must be carried out. This helps you pick up on trigger events which could impact your risk and the level of due diligence required. Ongoing monitoring should include the nature of the business relationship, as well as financial sanctions and politically exposed person (PEPs) screening.

Financial sanction lists and PEP databases are continually evolving, with individuals and entities being added, updated or removed. Due to the nature of these lists and databases, ongoing screening can be a vital tool to ensure you are aware if your customer becomes listed.