What are some common Customer Due Diligence (CDD) mistakes?

Mistake 1: Not Verifying Beneficial Owners

"I verified the company director, that's enough"

Problem: The director might be a nominee for someone else. You must identify anyone with 25%+ ownership or control.

Fix: Always ask "Who owns or controls this entity?" and verify those individuals. easyAML queries business registers to ensure you're getting the most accurate view of directors and beneficial owners.

 

Mistake 2: Accepting Poor Quality Documents

"The photo is blurry but I can kind of see them"

Problem: You're responsible for adequate verification. Poor quality = inadequate verification.

Fix: Insist on clear, legible documents. easyAML ensures the clients submit legible documents and verifies them for you!

 

Mistake 3: Verifying Too Early

"I verified them when they first inquired, 6 months ago"

Problem: Verification must be done before providing the service. Old verification might be outdated.

Fix: Verify immediately before or at the time of providing services. If time has passed, refresh your checks.

 

Mistake 4: Not Understanding Transaction Purpose

"They're buying property, that's all I need to know"

Problem: You need to understand WHY they're buying, with whose money, for what purpose.

Fix: Ask questions. Understand the full context. Document their answers.

 

Mistake 5: Same CDD for Everyone

"I use the same checklist for all clients"

Problem: High-risk clients need enhanced checks. One-size-fits-all is inadequate.

Fix: Risk-assess each client and tailor your CDD to their risk level. easyAML automatically classes a clients risk based on a number of factors.

 

Mistake 6: Not Documenting the Process

"I definitely checked their ID, I just didn't write it down"

Problem: If you can't prove you did CDD, AUSTRAC treats it as if you didn't.

Fix: Document everything. Keep records for 7 years. 

 

Mistake 7: Trusting Client's Word

"They seem honest, I don't need to verify"

Problem: Criminals often seem trustworthy and professional. That's how they succeed.

Fix: ALWAYS verify. Trust but verify. Your gut feeling isn't CDD.

 

Mistake 8: Ignoring Red Flags

"Something seemed off but I didn't want to be rude by asking more questions"

Problem: Red flags require investigation. Ignoring them can lead to facilitating money laundering.

Fix: If something doesn't add up, ask more questions. It's your job, not rudeness.