Chapter 29

Question 1

What is the purpose of CDD?

Answer 1

To know and understand a client’s identity and business activities

Question 2

Is CDD a legal requirement?

Answer 2

Yes

Question 3

What’re the required components of CDD?

Answer 3

• Identifying the client
• Identifying the beneficial owners so that ownership and control structure can be understood and the identities of any individuals who are the owners or controllers can be known
• Gathering info on the intended purpose and nature of the business relationship

Question 4

What’re the stages of CDD?

Answer 4

1 - Identification

2 - Risk assessment

3 - Verification

Question 5

Who will count as beneficial owners for bodies corporate?

Answer 5

Voting rights and shares > 25%

Question 6

Who will count as beneficial owners for partnerships other than LLPs and LPs?

Answer 6

Entitled to or controls >25%

Question 7

Who will count as beneficial owners for trusts?

Answer 7

The executor

Question 8

What is the minimum needed for CDD in respect of companies?

Answer 8

Listed companies
• Company name & number
• Address of registered office and, if difference, place of business

Unlisted companies
• Company name & number
• Address of registered office
• Articles of association / other governing docs
• Names of board members & senior persons
• Shareholder / member who own / control 25% of shares

Question 9

How is a business relationship defined as in the 2017 Regulations?

Answer 9

the relationship between a relevant person and a customer, which arises out of the business of the relevant person and is expect by the relevant person at the time when contact is established, to have an element of duration

Question 10

Give examples of events that prompt a CDD update

Answer 10

• A change in client’s identity
• Change in beneficial ownership or the client
• Change in service provided
• Information that is inconsistent with the business’ knowledge of the client

Question 11

What is SDD?

Answer 11

It is CDD that is applied when a client is low risk - in accordance with the business’s risk assessment criteria

Question 12

What is EDD? and when is it applied?

Answer 12

It is CDD when a client is high risk

Applied when:
• high risk of MLTF
• In any occasional transaction / business relationship with a person in high risk country
• Client is a potential PEP
• When client has provided false / stolen identification documents
• Transaction is complex / large

Question 13

What must an EDD produce include?

Answer 13

• Examining the background and purpose of the engagement

* Increasing the degree and nature of monitoring of the business relationship

Question 14

How long should businesses apply EDD measures to PEPs?

Answer 14

For more than 12 months after they have ceased to hold a prominent public function

Question 15

What information must be obtained for CDD for companies?

Answer 15

• Full name of company
• Registered number
• Registered office address and, if different principal place of business
• An shareholders ho ultimately own / control more than 25% of the shares / voting rights
• Identity of any agent / intermediary purporting to act on behalf of the entity ad their authorisation to act

Question 16

What information must be obtained for CDD for a listed or regulated entity?

Answer 16

• Full names
• Membership / registration number
• Address

Question 17

What information must be obtained for CDD for government / similar bodies?

Answer 17

• Full name of body
• Main place of operation
• Government / supra-national agency which controls it

Question 18

When a document isn’t an original but could be mistaken for one, what should you do?

Answer 18

The document should be annoyed to that effect

Question 19

Can you use electronic ID when doing CDD?

Answer 19

Yes - but not obligatory

Can reduce risk by supporting electronic verification

Question 20

When is it necessary to identify the beneficial owner(s)?

Answer 20

Where the client isn’t a natural person