Customer Due Diligence (CDD) Guide for Australian Reporting Entities

What is Customer Due Diligence (CDD)?

Customer Due Diligence is the process of identifying and verifying who your customers are before conducting business with them. Under the AML/CTF Act, you must collect and verify customer information to confirm their identity and assess the money laundering and terrorism financing risks they pose.

When Must You Conduct CDD?

• Before establishing a customer relationship
• Before conducting occasional transactions over AUD 10,000
• When you form a suspicion of money laundering or terrorism financing
• When there is a material change in customer information

Identity Verification Documents

You must verify customer identity using primary and secondary documents:

Primary Documents (Individual)

• Passport (Australian or foreign)
• Drivers license (state-issued)
• Government photo ID card

Secondary Documents (Individual)

• Birth certificate
• Medicare card
• Bank statement (within 3 months)
• Utility bill (within 3 months)
• Insurance policy statement

For Companies

• ASIC company extract
• Certificate of Incorporation
• Constitutional documents

Beneficial Ownership Verification

You must identify and verify beneficial owners (those who ultimately own or control the customer):

• ☐ Ask customer directly who owns/controls the entity
• ☐ Verify identity of beneficial owners using documents
• ☐ For trusts, identify trustee and beneficiaries
• ☐ For companies, identify directors and shareholders
• ☐ For partnerships, identify all partners
• ☐ Document percentage ownership/control
• ☐ Keep records of beneficial ownership information

Enhanced Due Diligence (EDD) Triggers

Conduct enhanced due diligence for higher-risk customers:

• Customers from high-risk jurisdictions
• Politically exposed persons (PEPs)
• Customers with unknown source of funds
• Complex ownership structures
• Cash-intensive businesses
• Customers requesting unusual structures

Enhanced Due Diligence Procedures

• ☐ Conduct additional investigation of customer background
• ☐ Verify source of funds used in transaction
• ☐ Obtain declaration of beneficial ownership with statutory declaration
• ☐ Conduct media screening (news, criminal databases)
• ☐ Document enhanced due diligence findings
• ☐ Consider whether to proceed with relationship

Sanctions Screening Checklist

• ☐ Check customer name against DFAT sanctions list
• ☐ Check against UN Security Council sanctions lists
• ☐ Check against ASIC and regulatory blacklists
• ☐ Repeat screening at regular intervals
• ☐ Document all screening results
• ☐ Block customer if match found

CDD Documentation Requirements

• ☐ Copy of identity documents collected
• ☐ Beneficial ownership information
• ☐ Source of funds declaration
• ☐ Sanctions screening results
• ☐ Enhanced due diligence findings (if applicable)
• ☐ Date CDD completed
• ☐ Staff member who conducted CDD
• ☐ Retain records for minimum 7 years

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