It has become crucial for organizations, financial institutions and, DNFBPs to continue to tackle financial security and remain compliant with Anti-money laundering regulations. One of such way of tackling financial crimes is through Customer due diligence. The process of customer due diligence encompasses several processes and the CDD becomes defective where the identification of the customer is not verified. One aspect of customer identification is the “address verification” of the customer.
Address verification is the steps taken by a company to validate the veracity of the customer’s residential address or place of business. This is important because it helps to ensure that the customer can be trailed to the address for any transactional purpose or any other reason required by the regulation.
It is advised that before a company makes an informed decision on the customer onboarding, the company must first confirm the address of the customer.
Some of the red flags to be mindful of when conducting address verification on a customer are;
- Recurrent change of the customer’s address
- Identical address used by another or multiple customers
- Irregularities between the geolocation and the IP address of the customer
- Conflict in the customer’s address and his profile.
Importance of Carrying out Address Verification
- Adequate address verification prevents a company from onboarding financial criminals and swindlers and this will prevent them from having access to the system with fake motives and identity
- Carrying out address verification allows an entity to appropriately classify a customer as high-risk or low-risk based on the jurisdiction of the customer. With adequate address verification carried out, an entity will have an accurate customer profile and will know if it warrants reporting suspicious transactions to the authorities or not.
- This process helps a company to carry out seamless and flawless AML measures and this goes a long way to prevent financial criminal from access into the system
- An entity that conducts address verification on its customers is being compliant with the AML regulations and shall not be found wanting or be subject to non-regulatory fines.
Conclusion
Financial Institutions and DNFBPs must ensure to originate and expand ways to carry out impeccable customer due diligence of their clients as a means to curbing money laundering, as it helps to have a holistic customer profile and helps to detect red flags.
You can contact us for free legal advice online for a chat in Dubai to provide you with more information about how your business or company can stay compliant with AML regulations.
We provide other legal services ranging from company formation, intellectual property, family law, immigration, and a host of others in the Middle East, Africa, Asia, and India.
We at eLegal Consultants look forward to meeting you and are ready to journey with you to actualize your dreams. Contact us today.
