Customer Due Diligence (“CDD”) is a fundamental element of Anti-Money Laundering (“AML”) and compliance frameworks. For corporate clients, understanding what Corporate Service Providers (“CSPs”) require — and why — can significantly improve onboarding efficiency and ongoing relationship management.
Why CDD Is Required
CSPs are subject to AML and Countering the Financing of Terrorism (“CFT”) obligations under Maltese legislation and FIAU guidance. As gatekeepers, CSPs must ensure they understand:
- Who they are dealing with
- Who ultimately owns or controls the structure
- The purpose and nature of the business relationship
CDD is therefore not optional, nor is it a one-time formality.
Core CDD Information
In practice, CSPs typically require:
- Identification and verification of directors and shareholders
- Confirmation of beneficial ownership
- Information on source of funds and source of wealth
- A clear description of business activities
Providing complete and consistent information from the outset helps avoid delays and follow-up requests.
Understanding Risk Profiles
CDD requirements may vary depending on the client’s risk profile. Factors such as ownership structure, jurisdiction, and business activity influence the level of documentation required.
This risk-based approach ensures that compliance measures remain proportionate and effective.
Ongoing Due Diligence
CDD does not end once onboarding is complete. CSPs are required to keep information up to date and reassess risk when circumstances change.
Clients play an important role by notifying CSPs of material changes in a timely manner.
Conclusion
Effective CDD supports transparency, regulatory compliance, and smoother client relationships. When clients understand the rationale behind CDD requirements, the process becomes more efficient and constructive for all parties involved.
