What is the primary aim of customer due diligence?

The primary aim of customer due diligence, often referred to as CDD, is to predict transaction types and identify suspicious activities. This process involves collecting and analyzing information about customers to understand their financial behavior and the nature of their transactions. By doing so, financial institutions can assess the risk associated with each customer, ensuring they comply with legal and regulatory obligations, particularly in areas such as anti-money laundering and combating the financing of terrorism.

Through effective due diligence, organizations are better equipped to spot unusual patterns or red flags that might indicate fraudulent activities or other risks. The focus on predicting transaction types allows institutions to establish baseline behaviors for their customers, facilitating the identification of anything that falls outside of these expected norms. This proactive approach is fundamental in maintaining the integrity of financial systems and protecting against illicit activities.

While gathering customer feedback, evaluating credit scores, and assessing customer satisfaction are essential aspects of customer relationship management, they do not directly relate to the core objective of customer due diligence, which is primarily focused on risk assessment and monitoring the legitimacy of customer transactions.