Ongoing Due Diligence (ODD)

Monitoring is the key component of ongoing due diligence. It involves detecting relevant changes in a customer’s profile. Special AML software solutions flag such updates as suspicious behavior if the change appears to be an atypical action. For example, if the customer makes multiple transfers abroad just below the reporting threshold in a short time. Detecting risks during monitoring helps follow further investigation, for example, further screening the customer to check if they haven’t appeared on any sanctions lists.

It’s important to file a Suspicious Activity Report (SAR) and refer the potential criminal or suspicious activity with customer details to regulatory authorities. In general, any activity that suggests an account holder may be attempting to hide information or engage in illegal transactions should be documented in a SAR.

Regulators can impose fines or sanctions if companies fail to report suspicious activity. More importantly, undetected criminal activity can damage operations, while repeated sanctions can hurt reputation, risking customer trust. 

If you aren’t a regulated entity, you aren’t obligated to implement ongoing due diligence measures. Despite that, processes like ongoing monitoring help companies build proper internal risk assessments. High-risk, regulated companies like banks, crypto platforms, investment firms, luxury art dealers, etc., are required to use ODD.

Perpetual KYC (pKYC) is a new term used to describe the KYC process, but not in a traditional way. pKYC involves the continuous updating and verification of customer information, typically using AI-driven automated systems to maintain accurate records through real-time checks. Similar to ongoing due diligence, pKYC is based on the practice of ongoing monitoring to confirm identities and assess risk levels of both individual and corporate clients.