CDD/KYC Verification Checklist
Key Insights
- A practical onboarding checklist: identity verification, beneficial ownership, PEP screening, and ongoing monitoring.
Before onboarding
- Collect legal name, address, date of birth, and government ID.
- Determine beneficial ownership for legal entities (25%+ threshold, per FATF guidance).
- Screen against sanctions lists, PEP lists, and adverse media before risk rating.
Verification is not one step but a chain: the document must be validated (authenticity), the person must be the document's owner (biometric or in-person check), and the identifiers must be consistent across sources. A single government ID check without address or DOB cross-validation is the most common onboarding gap found in audits.
Risk rating and monitoring
Assign a risk rating (low/medium/high) using the risk-based approach; EDD applies to high-risk relationships. Refresh CDD on trigger events — material transaction changes, PEP status changes, or regulatory flags. Ongoing monitoring is where most programs fail silently: refresh cycles that were annual at onboarding drift to every three years under workload pressure. Tie refresh dates to the risk rating (low: annual-plus, high: 6 months or event-driven) and enforce them in the workflow system, not in policy documents.
Documentation discipline
Record every verification step with timestamps and source references; an auditor must be able to reconstruct the decision. Retention should follow your jurisdiction's requirements (typically 5+ years after relationship end). Version the checklist itself so policy changes are traceable. Include a decision field — approved, rejected, escalated — with the named reviewer: vague "cleared" entries are the first thing an auditor challenges.
Common failure modes
- Beneficial ownership captured only at entity level, missing layered structures that dilute ownership below 25% but retain control.
- PEP screening at onboarding only, with no re-screening when lists change.
- Adverse media searches without a source-severity framework — a tabloid hit and a court judgment get equal weight.
References
- FATF Recommendations(regulatory)
- Wolfsberg Group — Guidance on CDD and Risk-Based Approach(industry)
- FCA — Financial Crime Guide (FCG)(regulatory)
Article Metadata
Bloom Taxonomy Questions
What ownership threshold is typically used to determine beneficial ownership per FATF guidance?
Why is enhanced due diligence applied to high-risk relationships rather than a uniform verification standard?
Write the onboarding checklist for a high-risk legal entity client, including the trigger events that require CDD refresh.
Further Reading
FATF
Financial Action Task Force — global AML/CFT standards and grey/black lists
FinCEN Press
FinCEN press releases — rulemakings, advisories, enforcement orders
ACAMS
Association of Certified Anti-Money Laundering Specialists — training, research, typologies
FinCEN
US Financial Crimes Enforcement Network — SAR filings, advisories, BSA guidance
OFAC
US Office of Foreign Assets Control — sanctions lists, enforcement actions
AMLA
EU Anti-Money Laundering Authority — rulebook, RTS, direct supervision
Feynman Concept Cards
Master each concept: read the ELI5, explore analogies, work examples, and teach it back.
Beneficial Ownership is a concept in regulations. In simple terms, Beneficial Ownership covers regulatory frameworks in Compliance. This compliance concept addresses key topics in the regulatory frameworks in compliance domain. Also known as: UBO, ultimate beneficial
Analogy
Example
Find Gaps
Explain Beneficial Ownership as if teaching a colleague who is new to regulations. Cover: what it is, how it works, and why it matters.
Create
Create a diagram that demonstrates Beneficial Ownership in a real-world regulations scenario. Walk through your design decisions.
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A diagram for Beneficial Ownership should include: 1. The core components of beneficial ownership 2. How they interact 3. Expected outcomes or outputs
Know Your Customer (KYC) is a concept in cdd kyc. In simple terms, Know Your Customer (KYC) covers customer due diligence within Compliance. This compliance concept addresses key topics in the customer due diligence within compliance domain. Also known as: KYC, know-
Analogy
Example
Find Gaps
Explain Know Your Customer (KYC) as if teaching a colleague who is new to cdd kyc. Cover: what it is, how it works, and why it matters.
Create
Create a checklist that demonstrates Know Your Customer (KYC) in a real-world cdd kyc scenario. Walk through your design decisions.
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A checklist for Know Your Customer (KYC) should include: 1. The core components of kyc 2. How they interact 3. Expected outcomes or outputs
Customer Due Diligence is a concept in cdd kyc. In simple terms, Customer Due Diligence covers customer due diligence within Compliance. This compliance concept addresses key topics in the customer due diligence within compliance domain. Also known as: CDD. Related
Analogy
Example
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Explain Customer Due Diligence as if teaching a colleague who is new to cdd kyc. Cover: what it is, how it works, and why it matters.
Create
Create a checklist that demonstrates Customer Due Diligence in a real-world cdd kyc scenario. Walk through your design decisions.
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A checklist for Customer Due Diligence should include: 1. The core components of cdd 2. How they interact 3. Expected outcomes or outputs
Politically Exposed Person is a concept in risk assessment. In simple terms, Politically Exposed Person covers risk assessment for Compliance. This compliance concept addresses key topics in the risk assessment for compliance domain. Also known as: PEP, politically-exposed-per
Analogy
Example
Find Gaps
Explain Politically Exposed Person as if teaching a colleague who is new to risk assessment. Cover: what it is, how it works, and why it matters.
Create
Create a matrix that demonstrates Politically Exposed Person in a real-world risk assessment scenario. Walk through your design decisions.
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A matrix for Politically Exposed Person should include: 1. The core components of pep 2. How they interact 3. Expected outcomes or outputs