New Solutions in the CDD Process Published by the Joint Committee of ESAs


The Joint Committee of the European Supervisory Authorities (“ESAs“) published an opinion on January 23, 2018 about the use of innovative solutions in customer due diligence (“CDD“) for financial institutions. A copy of the opinion is here.

Currently the Fourth Money Laundering Directive ((EU) 2015/849) imposes requirements on firms to carry out extensive CDD to identify customers, assess the purpose of their business and monitor the business relationship on an ongoing basis.

The ESAs explored solutions such as performing identity checks through smartphones that were previously done by looking at physical documents, such as passports. Additionally, the ESAs proposed using central identity documentation repositories (sometimes referred to as know your customer (“KYC“) repositories).

The ESAs were cautious of using this approach in all cases and said it should be used with reference to the specific firm’s money laundering and terrorist finance risk profile.