The increased risk of fraud and criminal activities has made it vital for professional services firms to ensure that they know the true nature and identity of their clients.
It is important to make sure that your clients are who they say they are and that any business partners can be trusted. These are big concerns for law firms and accountants, who are often working closely with lots of different people.
Two important ways to do this are through Know-Your-Customer (KYC) and Customer Due Diligence (CDD).
KYC
KYC are important guidelines and regulations to assist law and accountancy firms to verify their clients. You need to make sure they are who they say they are. For lawyers and accountants, this is important because you want to be sure you are working for someone genuine.
CDD
KYC checks help confirm that your clients are real. But CDD goes a bit further and checks out potential business partners or investments. This helps you make sure they are legal and can be trusted.
Why KYC and CDD matter
Checking out your clients with KYC and CDD is more than just remaining compliant. By following these regulations competently, you can help stop criminals from using your firm for money laundering.
Failure to remain compliant with the regulations can lead to heavy fines or even jail time. Not adhering to the guidelines set out by KTC and CDD could potentially lead to irreparable damage to your firm’s reputation.
What to check for
At the very least, firms need to ensure that their clients aren’t on any undesirable lists such as Politically Exposed Persons (PEPs) or are facing or have faced any sanctions. You also need to check details like:
- Full name
- Home address
- Date of birth
- A picture ID
In the past, CDD was mostly used by banks and financial companies. But now, all sorts of businesses are using it, even ones like art dealers or cryptocurrency traders.
For law and accountancy firms in the UK, this means there is more responsibility to make sure business is done right. By using KYC and CDD, your firm not only protects itself, but it also helps to make sure business is done honestly and legally.
With Summa Tech’s client onboarding software, KYC and CDD are all part of the onboarding process, ensuring professional services firms have the peace of mind that their clients are legitimate.
If you’d like more advice about KYC and CDD or would like to know more about how Summa Tech can assist you, please contact us today.