Quick Answer: What Is CDD And EDD In Banking?

What is the purpose of EDD?

As one of the largest state departments, the EDD: Administers the Unemployment Insurance and State Disability Insurance programs.

Audits and collects payroll taxes and maintains employment records for millions of California workers..

What is CDD in banking?

Assess the bank’s compliance with the regulatory requirements for customer due diligence (CDD). … The objective of CDD is to enable the bank to understand the nature and purpose of customer relationships, which may include understanding the types of transactions in which a customer is likely to engage.

What is difference between CDD and EDD?

CDD aims at collecting data about customers’ identity and contact information as well as measuring their risk. EDD is used for high-risk customers, aka those who are more likely to implement related to money laundering and terrorism financing activities due to the nature of their business or transactions.

What are the 3 components of KYC?

To create and run an effective KYC program requires the following elements: Customer Identification Program (CIP) How do you know someone is who they say they are? … Customer Due Diligence. … Ongoing Monitoring.

What is CDD EDD?

It is a rapid fire due diligence screening process. … The second step is Customer Due Diligence (“CDD”) which requires the bank to obtain information to verify the customer’s identity and assess the risk. If the CDD inquiry leads to a high risk determination, the bank has to conduct an Enhanced Due Diligence (“EDD”).

What are the types of CDD?

There are three levels of customer due diligence: standard, simplified and enhanced.Standard customer due diligence.Simplified customer due diligence.Enhanced customer due diligence.

What is standard due diligence?

Standard due diligence requires you to identify your customer as well as verify their identity. … This due diligence should provide you with confidence that that you know who your customer is and that your service or product is not being used as a tool to launder money or any other criminal activity.

What are the 3 stages of money laundering?

There are three stages of money laundering, each with a unique purpose. The first stage is placement, second is layering and third is integration.

What is the CDD rule?

Information on Complying with the Customer Due Diligence (CDD) Final Rule. The CDD Rule, which amends Bank Secrecy Act regulations, aims to improve financial transparency and prevent criminals and terrorists from misusing companies to disguise their illicit activities and launder their ill-gotten gains.

What is CIP verified?

A Customer Identification Program (CIP) is a United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act.

What is CDD in KYC process?

Customer Due Diligence (CDD) or Know Your Customer (KYC) policies are the cornerstones of an effective AML/CTF program. Put simply, they are the act of performing background checks on the customer to ensure that they are properly risk assessed before being onboarded.

What is the difference between customer due diligence and enhanced due diligence?

What is the difference between CDD and EDD? The difference between Customer Due Diligence and Enhanced Due Diligence is that CDD is a less strict verification procedure where you obtain the customer’s identity, address and evaluate the risk category of the customer.

What are CDD rule requirements?

The CDD Rule requires that financial institutions maintain “appropriate risk-based procedures for conducting ongoing customer due diligence,” including “[u]nderstanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile” and “[c]onducting ongoing monitoring to …

What is the difference between CIP and CDD?

For most compliance officers, however, the term KYC refers to the CIP phase of AML onboarding. CIP involves gathering information. Click here for more details: Developing a Well-Defined Customer Identification Program (CIP). CDD (customer due diligence) on the other hand is the second phase of the overall AML process.

What is the EDD process?

Enhanced due diligence (EDD) is a KYC process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by customer due diligence. EDD goes beyond CDD and looks to establish a higher level of identity assurance by obtaining the customer’s identity and …