Implementing innovative customer due diligence: proposal for universal model

Abstract

Purpose The purpose of this paper is to present the identification-verification-confirmation of identity (IVCid) model that can be used to retroactively analyze the existing customer identification programs and devise new ones that can be used in face-to-face or non-face-to-face environment. Design/methodology/approach This paper outlines the main elements of the customer due diligence (CDD) process and identifies those which may present a barrier to the customers. It then outlines the IVCid model. The model is used to analyze existing CDD approaches in physical presence, using reliable databases, biometrics and electronic signatures. Findings The IVCid model suggests that any customer identification program contains three elements: identification (collection of information), verification (checking the veracity of information) and confirmation of identity (linking the information to the individual). The accuracy of this model is confirmed by the analysis of the existing CDD procedures in some countries. Research limitations/implications This paper looks at a limited number of practical cases of CDD implementation. Further research might be needed to assess the strengths and weaknesses of biometric-based or e-signature-based solutions. Research might be needed to establish links between the IVCid model and financial inclusion. Practical implications The IVCid model allows for “modular” approach for the CDD procedures. It also underlines some risks associated with current CDD models. Social implications The IVCid model can be used to devise the CDD procedures that more effectively contribute to financial inclusion. Originality/value This paper proposes the first universal model for the CDD procedures that works for both face-to-face and remote scenarios while also being technology- and business-neutral.

Challenges for financial institutes in implementing robust customer due diligence in Pakistan

“…Based on the information gathered, the FIs analyse the customers' level of ML from their risk profile to help FIs decide whether to enter, terminate/remain in the relationship with their customers. Further, there remains confusion between the term know your customer (KYC) and CDD Shust and Dostov (2020). The KYC concept was recognised, focusing only on customer information gathering while onboarding (Castriani, 2021).…”

“…The justification behind such an initiative was to allocate a critical role to the private banks to prevent three stages of the ML process. These measures include verifying the identity documents of a client and beneficial owner through trustworthy sources, information and verification of business clients and conducting ongoing due diligence (ODD) throughout a relationship (FATF, 2013; De Koker, 2006; Shust and Dostov, 2020). Fundamentally, CDD is divided into two parts.…”

“…Further, there remains confusion between the term know your customer (KYC) and CDD Shust and Dostov (2020). The KYC concept was recognised, focusing only on customer information gathering while onboarding (Castriani, 2021).…”

Digital Transformation of Signatures: Suggesting Functional Symmetry Approach for Loan Agreements

“…Customer due diligence might be performed in a multitude of ways; most do not involve usage of any type of electronic signature at all: such as video identification, usage of digital identity, trusted third parties, etc. In essence there is a wide spectrum of approaches to establish the identity of the customer with different assurance levels, depending on the level of risks [26]. Since signatures (either handwritten or electronic) are not intrinsically designed for ex ante identification they do not constitute a reliable CDD method.…”

Aplikačné Problémy Regulácie Neziskových Organizácií Z Pohľadu Legalizácie Príjmov Z Trestnej Činnosti a Financovania Terorizmu

“…22 Vyššie uvedené ustanovenie je odrazom obdobného uplatnenia jedného z opatrení základnej starostlivosti o klienta, v rámci ktorého finančné inštitúcie sú povinné identifikovať klienta pri vykonávaní obchodu, hodnota ktorého dosiahne najmenej 1 000 eur. 23 Vo všeobecnosti identifikácia darcu predstavuje proces zhromažďovania a uchovávania informácií o darcovi NPO. Identifikácia darcu zahŕňa interakciu NPO s darcom, v procese čoho NPO získava základné informácie o darcovi, a to za účelom potvrdenia jeho totožnosti.…”