Guide to Due Diligence in Financial Institutions

Goals

Introduction to Due Diligence

1. Definition and Importance of Due Diligence

   • Understanding due diligence and its role in financial institutions.

   • The necessity of due diligence for risk management and regulatory compliance.

2. Types of Due Diligence

   • Customer Due Diligence (CDD)

   • Enhanced Due Diligence (EDD)

   • Simplified Due Diligence (SDD)

   • Ongoing Monitoring

Necessity and Usage of Due Diligence

3. Necessity of Due Diligence

   • Legal and regulatory requirements

   • Risk assessment and management

   • Prevention of financial crimes (money laundering, fraud, terrorism financing)

4. Usage Under Different Financial Institutions

   • Application in banks, investment firms, insurance companies and fintech startups.

   • Specific requirements for each type of financial institution.

Due Diligence and KYC

5. Due Diligence in KYC

   • Role of due diligence in verifying customer identity and assessing risks.

   • How due diligence supports compliance with KYC regulations.

6. Raising Suspicious Activity Reports (SARs)

   • How due diligence leads to the identification of suspicious activities.

   • Process of filing SARs and its importance in combating financial crimes.

Conducting Due Diligence

7. Who Conducts Due Diligence?

   • Roles and responsibilities of compliance officers, due diligence officers, and other relevant personnel.

   • Coordination between different departments.

8. Goals Behind Due Diligence

   • Identifying and mitigating risks.

   • Ensuring regulatory compliance.

   • Protecting the integrity and reputation of the financial institution.

Information Collection During Due Diligence

9. Information Obtained During Due Diligence

   • Customer identification and verification (documents, data sources).

   • Financial background and transaction history.

   • Purpose and nature of the business relationship.

Due Diligence in Traditional vs. Digital Banking

10. Due Diligence in Traditional Banking Services

    • Procedures and best practices for face-to-face customer interactions.

    • Documentation and verification processes.

11. Due Diligence in the Digital Era

    • Challenges and opportunities in digital due diligence.

    • Use of technology and digital tools for remote customer verification.

12. Effective Digital Due Diligence

    • Strategies for conducting due diligence without physical presence.

    • Ensuring accuracy and compliance in a digital environment.

Improving the Due Diligence Framework

13. Improvements in Current Due Diligence Framework

    • Identifying gaps and challenges in existing practices.

    • Recommendations for enhancing the effectiveness of due diligence processes.

14. Insights for Compliance Officers and Due Diligence Officers

    • Best practices and practical tips for conducting efficient due diligence.

    • Staying updated with regulatory changes and technological advancements.

Conclusion

15. Summarizing Key Takeaways

    • Recap of the critical aspects of due diligence.

    • Emphasizing the importance of continuous improvement and vigilance.

16. Final Thoughts and Next Steps

    • Encouraging ongoing learning and professional development.

Resources for further reading and skill enhancement.

Prerequisites

No Prerequisites required