Financial transactions, by their very nature, bring risks for both customers and organizations. This is why it is very important to conduct risk analysis in transactions for new generation financial instruments in addition to credit and financing, factoring or leasing processes. So much so that there are many societal threats, from money laundering to terrorist financing, among the risks mentioned.
The common application of risk analysis in financial institutions, which is a subject that should be taken very seriously considering the results, is Customer Due Dilligence (CDD); Customer due diligence in Turkish. Let's consider this concept, which includes identification processes at the corporate or individual level, through digital finance transactions. Let's see how CDD protects all processes and organizations!
Customer due diligence represents a very critical process for financial transactions. Although it is simply explained as the risk analysis of the individual or institution to be financed in many respects, CDD is actually an extremely complex process. Because the process includes an investigation on the realization of transactions that pose serious threats such as money laundering and terrorist financing in finance. From this point of view, the clearest definition of the concept is as follows:
“Customer due diligence is the set of practices in which information about the customer is collected and the possible risks of the customer are calculated in the light of the data.”
KYC; In other words, the "know the customer" process is actually the subject of CDD. KYC, performed with remote or on-site identification, consists of a series of applications using legal identity documents and non-falsifiable biometric data. This is the most important pillar of customer due diligence analysis. With KYC, the financial institution legally secures the customer's identity and eliminates the possibility of forgery without vulnerabilities.
Video KYC applications are of great importance, especially in remote loan and financing services. Applications can be easily performed with authentication and video call solutions developed using the latest technology. At this point, you can learn about the best of its field, LiveAuth Communicator, from our article.
To grasp the importance of CDD processes, it is enough to look directly at the applications and the results that will arise from them. Let's say a company applies to a bank to get a large loan. There are several different risks for the institution in the process of granting the loan. In this part, it is an important point that the legal or real person to whom the loan is given has connections or in which area the money will be used. Issues such as whether the person is involved with any criminal element and whether he has any collateral to repay the loan are also among the risks. The security investigation process that a person or institution initiates to detect such risks after a loan application is called customer due diligence.
Considering the aforementioned risk factors, the importance of CDD becomes evident. When the process is not carried out correctly, serious financial and terrorist crimes can occur. Banks and financial institutions as well as customers and even a social segment can be affected by such crimes.
Let's take a quick look at the benefits of customer due diligence and accurate risk analysis to organizations:
In short, CDD; In other words, the customer due diligence process is a system that significantly protects financial enterprises. If you want to create a secure risk analysis policy for your finance business, you should immediately meet ArkSigner's remote identification and verification solutions. With LiveAuth and LiveAuth Communicator, you can initiate risk-free and secure customer acquisition processes.