CDD, and, where necessary, EDD are the core preventive measures that help LFIs manage the risks of legal person and legal arrangement customers. Because of this, LFIs are prohibited from maintaining anonymous accounts, and from onboarding any account or customer with fictitious names or characteristics. LFIs must perform CDD on every customer.

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 LFI’s services. Therefore, the LFI must identify customers that are legal persons and legal arrangements. When the customer is a legal person or arrangement, the process of understanding the customer (“knowing your customer”) is more complex and requires additional steps.

Where an LFI cannot satisfy itself that it understands a legal person or legal arrangement-including when it has doubts that it has identified the individuals who truly own and control the legal person or legal arrangement—then it must not accept that legal person or legal arrangement as a customer. If there is an existing business relationship, the LFI should not continue it. LFIs should also consider filing a Suspicious Transaction Report, as discussed 4.4 below.