CDD, and where necessary EDD, are the core preventive measures that help LFIs manage the risks of all customers, particularly higher-risk customers. As discussed below, each stage of the CDD process gives LFIs an opportunity to collect the information they need to identify and manage the specific risks of higher-risk customers.

The goal of the CDD process is to ensure that LFIs understand who their customer is and the purpose for which the customer will use the LFIs services. Where an LFI cannot satisfy itself that it understands a customer, then it should not accept it as a customer. If there is an existing business relationship, the LFI should not continue it. LFIs should also consider filing a STR, as discussed in Section 3.3.2.

Under Article 5 of AML-CFT Decision, LFIs should conduct CDD before or during the establishment of the business relationship or account, or before executing a transaction for a customer with whom there is no business relationship. Although Article 5 permits CDD to be delayed in circumstances of lower risk, the potential higher risk of cash-intensive businesses makes it unlikely that delayed CDD will be appropriate in the context of onboarding such customers. To this end, at the time of account opening, the LFI should seek to understand the cash-intensive business’ operations and business structure, the intended use of the account (including anticipated transaction volume, products, and services used), the geographic location(s) involved in the relationship, and jurisdiction(s) of operations. As part of collecting this information, the LFI should also assess the availability of information on the cash-intensive business and cooperation of the business in providing information to the LFI.

The following elements of CDD should be carried out for all customers, no matter the customer type.