Foreword
The Customer Due Diligence Guide (the “Guide”) is the initiative of AIMA’s Sound Practices Committee.
While the intention has been to produce this resource for general use, it should not be assumed that one size fits all. The size, nature, jurisdiction, regulation and complexity of a particular fund manager’s operations and investment strategy may mean that some or all of the sound practices as set out in the Guide may be inappropriate to the business of a particular fund manager. Additionally, investor needs, technological capabilities and regulatory requirements will change over time. Accordingly, the sound practices set out in the Guide should not be regarded as definitive or “best” practices, though ideas for growth and development may be provided in the Guide.
As a general resource, the Guide should not be regarded as a substitute for professional advice, which should still be obtained where appropriate. Further, fund managers should pay close attention to applicable legal or regulatory requirements and guidelines issued by regulatory authorities in applicable jurisdictions, which are likely to be more detailed than the sound practices described in the Guide.
We would like to thank the members of the working group (who are listed in Appendix B), all of whom have volunteered their time and worked hard to produce this revision of a valuable Guide. We intend to revise the Guide further as and when material developments occur.
Table of Contents
1 Introduction
1.1 Approach to discussing CDD in this Guide
1.2 CDD in the onboarding process
2 Risk-based approach
2.1 Applying a risk-based approach
2.2 Customer risk assessment
2.3 Documenting risk analyses
3 Governance
3.1 Establishing policies and procedures
3.2 Designating the MLRO
3.3 Escalating to senior management
3.4 Challenges of CDD
3.5 Establishing CDD governance
4 Customer due diligence
4.1 Standard CDD
4.2 Simplified CDD
4.3 Enhanced CDD
4.4 UBO identification
4.5 Ongoing CDD
4.6 Suspicious activity reports
4.7 Letters of assurance/reliance
4.8 Asset due diligence
4.9 Crypto assets
5 Virtual/digital CDD
5.1 Digital identity
5.2 Digital onboarding
5.3 Electronic signatures and verification
6 Sanctions
6.1 Sanctions screening
6.2 Types of sanctions screening
6.3 Risk assessment
6.4 Policies and procedures
6.5 Roles and responsibilities
6.6 The screening process
6.7 Frequency of sanctions screening
6.8 Dealing with positive identification
6.9 Testing, monitoring and training
7 Outsourcing CDD
7.1 Choosing an outsourced provider
7.2 Liability versus responsibility
7.3 Outsourcing contracts
7.4 Special considerations in outsourcing arrangements
Download the Guide
For further information, please contact Jennifer Wood, Managing Director, Global Head of Asset Management Regulation & Sound Practices.
Webinar Replay
AIMA Webinar Replay: Launch of Guide to Sound Practices for Customer Due Diligence
Recorded on September 7, 2022
Customer due diligence is a vital part of investor onboarding for funds, investment managers and fund administrators. It encompasses anti-money laundering checks, sanctions checks and beneficial ownership reporting. AIMA, with the help of a working group of member volunteers co-chaired by Matthew Banham from Dechert and Anthony Cerroni from SS&C, has prepared a new Guide to Sound Practices for Customer Due Diligence, which focuses on key areas of the process including: (i) establishing a risk-based approach, (ii) approaches to due diligence including with respect to crypto assets and identification of underlying beneficial owners, (iii) virtual/digital CDD, (iv) sanctions screening, (v) internal governance, and (vi) outsourcing. We are pleased to invite you to attend the launch of this guide which will feature a panel discussion of key sound practice considerations for customer due diligence.
Moderator:
Jennifer Wood, Global Head of Asset Management Regulation and Sound Practices, AIMA
Panelists:
Matthew Banham, Partner, Dechert LLP
John Bedford, Partner, Dechert LLP
Anthony Cerroni, Managing Director, Global Head of Investor Services, SS&C
Ben Dear, Director, AML AEOI, SS&C