Know Your Customer (KYC) and Customer Due Diligence (CDD)
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CDD triggers
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, gambling, dealers in goods (cash), and crypto?
Transfer of funds and crypto: above €1,000; gambling: €2,000; dealers in goods paid in cash: €10,000.
What overrides every CDD threshold?
Suspicion of ML or TF — the amount becomes irrelevant and CDD must be applied.
CDD measures
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.
Verification
What kind of source must identity verification rely on?
A reliable and independent source — not simply the customer's own word.
Beneficial owner
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.
Timing
When must verification normally take place?
Before establishing the business relationship or carrying out the transaction, with only narrow risk-limited exceptions.
Documents
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.
PEPs
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.
Correspondent banking
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.
Third-party reliance
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.
EDD
Is EDD ever a substitute for regular CDD?
No — it must be applied in addition to, and cannot be substituted for, regular CDD.
Beneficial ownership register
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.
Prohibitions
What kinds of accounts are flatly prohibited?
Anonymous accounts or accounts in names other than those in official identity documents.
SDD
What conditions unlock simplified due diligence?
Genuinely lower risk combined with the absence of any suspicion of ML/TF.
Failed CDD
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.
Monitoring
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.