Know Your Customer (KYC) and Customer Due Diligence (CDD)

18 free CySEC AML Chapter 6 flashcards. Tap a card to flip, or use the arrow keys to move through the deck.

Card 1 of 18CDD triggers

1 / 18

Tap the card to flip · use ← → arrow keys to navigate

All 18 cards in this deck

What is the CDD threshold for an occasional transaction?: €15,000 — whether in one payment or several linked payments.
What are the CDD thresholds for transfers of funds, crypto-asset services and gambling, and what is the cash limit for goods and services?: Transfer of funds: above €1,000; crypto-asset services: €1,000 or more; gambling: €2,000 or more. Exam material: traders in goods apply CDD to cash deals of €10,000 or more. Since 31 December 2024: that trigger is gone, and cash payments above €10,000 for goods or services, single or linked, are banned.
What overrides every CDD threshold?: Suspicion of ML or TF — the amount becomes irrelevant and CDD must be applied.

What are the four CDD measures?: Identify and verify the customer; identify and verify the beneficial owner; understand the purpose/intended nature of the relationship; conduct ongoing monitoring.

What kind of source must identity verification rely on?: A reliable and independent source — not simply the customer's own word.

What must a firm do to identify the beneficial owner of a company?: Take reasonable steps to understand the ownership and control structure of the customer.

When must verification normally take place?: Before establishing the business relationship or carrying out the transaction, with only narrow risk-limited exceptions.

How current must address evidence be, and can one document prove both identity and address?: Address evidence must be no more than six months old, and the same document cannot be used to verify both identity and address.

What extra measures apply to a PEP relationship?: Senior management approval, establishing source of wealth and source of funds, and enhanced ongoing monitoring.
How long does PEP treatment continue after leaving office, and to whom else does it extend?: At least 12 months (risk-sensitive), and it extends to the PEP's immediate family members and close associates.

What must a firm do before entering a correspondent banking relationship?: Assess the respondent institution's AML/CFT controls and obtain senior management approval; dealing with shell banks is prohibited. Exam material: this covers cross-border relationships involving payments with third-country respondents. Since 20 October 2023: EEA respondents too.

Where does responsibility sit when a firm relies on a third party for CDD?: It remains with the Obliged Entity that relies on the third party — you can outsource the work but not the accountability.

Is EDD ever a substitute for regular CDD?: No — it must be applied in addition to, and cannot be substituted for, regular CDD.

What is the standard for beneficial-ownership information, and can firms rely on the register alone?: It must be adequate, accurate and current; firms must not rely exclusively on the register and must still apply a risk-based approach.

What kinds of accounts are flatly prohibited?: Anonymous accounts or accounts in names other than those in official identity documents.

What conditions unlock simplified due diligence?: Genuinely lower risk combined with the absence of any suspicion of ML/TF.

What must a firm do if it cannot complete CDD?: Not carry out the transaction or establish the relationship, terminate any existing one, and consider filing a suspicious transaction report.

Why must a firm build an economic profile of the customer?: It provides a baseline of expected activity against which unusual or suspicious transactions can be identified.