What is Customer Due Diligence?
Customer due diligence is one of the processes that a corporate service provider or a financial institution can use to detect suspicious transaction. In efforts to ensure that illegal channeling of funds is not carried out in the country’s financial markets, the Singapore government is doing all that’s in its power. It has settled for the preventive approach, including detecting and deterring such transactions. Some of its efforts include upping its game in anti-money laundering (AML). So far, MAS has established two departments for the same, enforcement and AML. What about the customer due diligence process? Let’s learn about this procedure.
Why is Customer Due Diligence Compulsory?
Singapore identifies how vulnerable institutions are to misuse by fraudsters and terrorists. Therefore, without customer due diligence, such people could use their financial institutions and businesses for corruption, money laundering and terrorism financing. Consequently, the integrity of the economy and the victims, financial institutions and enterprises, is compromised. The country believes that customer due diligence is the key to protecting them. As a matter of fact, it is a process that the government relies on to a greater extent in countering terrorism financing and combating money laundry.
Who should undergo Customer Due Diligence?
As long as your company is guided by the Countering the Financing of Terrorism (CFT) and AML regulations, all your new clients need to undergo customer due diligence. It involves figuring out the identity of the customer and any other interested party in the company. The identity should also be verified using the necessary supporting documents.
However, the process shouldn’t stop there. On the contrary, it should be a continuous process, and the information your company has on its customers should be up to date. Otherwise, not checking the data of both the new and the existing clients at all times will make the records irrelevant.
Supporting documents necessary for the Customer Due Diligence Procedure
As mentioned earlier, you will need supporting documents to verify the identity of the person you are transacting with effectively. Therefore, the client has to avail the following documents:
- Individual NRIC and passport or both
- Individual documents, including bank statements and utility bills
- Current not forgetting recent financial statements
- Detailed information on the structure of the company’s ownership, including the nature of the business
How long does the process take?
There is no definite time for the completion of the customer due diligence procedure. As a matter of fact, the profile and the cooperation of the client play a massive role in determining the period.
No company should take customer due diligence lightly. The fact that it brings out transparency which is a crucial ingredient of success. No business wants the excellent reputation of Singapore to be destroyed since trust is vital in the business world. That’s why they should carry out customer due diligence to prevent terrorism funding and money laundering since it can jeopardize the reputation and trust. Besides that, it is an ideal way of upholding integrity and promoting the stability of the country’s financial system.