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KYC and Customer Due Diligence

What does Know Your Customer (KYC) mean?

Know Your Customer, or KYC, refers to the checks firms need to perform on customers and potential customers before entering into a business relationship with them. Under the BSA/AML regulations, all financial institutions in the US must have robust KYC processes in place to prevent identity theft fraud, money laundering and terrorist financing.

We can answer your questions about KYC and Customer Due Diligence

What is the difference between KYC, Customer Identification Program, (CIP) and Customer Due Diligence (CDD)?

CIP and CDD, are both part of the KYC process. CIP is the first step and involves collecting and documenting a customers’ name, address, date of birth and social security number. CDD is the process of verifying that information and assessing if the customer poses any risk to the business. CDD involves Sanctions, PEP and RCA screening, and if a match is made, enhanced due diligence is then required for a greater level of scrutiny.

What steps are involved in the KYC process?

The first step of the KYC process is to identify and verify the customer to ensure they are who they say they are. The second step is to screen the customer against global PEP, SIP, RCA and Sanction lists. If a match is made, the next step is enhanced due diligence. Once a client has passed the checks, the KYC process is not over. To meet BSA/AML regulations, businesses must also monitor all clients in their database for any changes to the level of risk they pose.

What are the US CDD and KYC requirements?

The BSA/AML requires that all US financial institutions have processes in place in order to detect, prevent and disrupt money laundering and terrorist financing. To do this, they must have robust CIP, CDD and KYC processes in place to identify, verify, screen and monitor on an ongoing basis, all customers to ensure they are not involved in – or suspected of being involved in – anything suspicious.

How can US firms meet their CDD and KYC requirements?

To meet CDD and KYC requirements, US firms must verify, identify and screen customers using reliable and independent sources. With so much data to cross-reference, undertaking this process manually is hugely time consuming and open to error. Therefore, the quickest, easiest and most reliable solution is an electronic verification platform that can perform AML checks, PEP and sanctions screening, enhanced due diligence and ongoing monitoring all from one place.

One platform for all your KYC requirements

SmartSearch is the only AML solution that can meet all your KYC requirements from one platform. Just enter an individual’s name, address, date of birth and social security number and, not only will the system perform a full AML check with Sanction and PEP screening, but will also trigger enhanced due diligence on anything suspicious and monitor all clients on an ongoing basis. 

A phone operative working at his desk in the SmartSearch office

We can help you stay compliant

Our user-friendly system enables team members at any level to perform AML checks easily and effectively and, thanks to the fully integrated app, run checks remotely too. Every check performed is automatically saved into the system to ensure watertight record-keeping, and SmartSearch can even run retrospective checks to ensure a complete compliance history. What’s more, the platform is constantly being updated and improved to ensure users never need to upgrade.
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