Customer Due Diligence (CDD) is the process of assessing and verifying the identity of customers as part of regulatory compliance and risk management in the cryptocurrency industry. This process is essential for cryptocurrency businesses, such as exchanges, wallets, and other service providers, to ensure they are not facilitating illegal activities like money laundering or terrorist financing.
This involves collecting and verifying personal information from customers, such as their full name, date of birth, residential address, and government-issued identification documents like passports or driver’s licenses. Crypto businesses assess the risk associated with each customer based on factors like their transaction history, source of funds, geographic location, and the type of services they are using.
For high-risk customers or transactions, enhanced due diligence may be conducted. This can include additional verification steps, ongoing monitoring, and more extensive background checks. Monitoring customer activities and behaviour is a crucial part of CDD to detect and report suspicious activities, such as large or unusual transactions that could indicate money laundering or other illicit activities.
Cryptocurrency businesses must comply with regulatory requirements, such as anti-money laundering (AML) and Know Your Customer (KYC) regulations, which mandate the implementation of robust CDD processes.
