TY - JOUR

T1 - Implementing innovative customer due diligence: proposal for universal model

AU - Shust, Pavel M.

AU - Dostov, Victor

N1 - Shust, P.M. and Dostov, V. (2020), "Implementing innovative customer due diligence: proposal for universal model", Journal of Money Laundering Control, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JMLC-01-2020-0007

PY - 2020/3/25

Y1 - 2020/3/25

N2 - PurposeThe purpose of this paper is to present the identification-verification-confirmation of identity (IVCid) model that can be used to retroactively analyze the existing customer identification programs and devise new ones that can be used in face-to-face or non-face-to-face environment.Design/methodology/approachThis paper outlines the main elements of the customer due diligence (CDD) process and identifies those which may present a barrier to the customers. It then outlines the IVCid model. The model is used to analyze existing CDD approaches in physical presence, using reliable databases, biometrics and electronic signatures.FindingsThe IVCid model suggests that any customer identification program contains three elements: identification (collection of information), verification (checking the veracity of information) and confirmation of identity (linking the information to the individual). The accuracy of this model is confirmed by the analysis of the existing CDD procedures in some countries.Research limitations/implicationsThis paper looks at a limited number of practical cases of CDD implementation. Further research might be needed to assess the strengths and weaknesses of biometric-based or e-signature-based solutions. Research might be needed to establish links between the IVCid model and financial inclusion.Practical implicationsThe IVCid model allows for “modular” approach for the CDD procedures. It also underlines some risks associated with current CDD models.Social implicationsThe IVCid model can be used to devise the CDD procedures that more effectively contribute to financial inclusion.Originality/valueThis paper proposes the first universal model for the CDD procedures that works for both face-to-face and remote scenarios while also being technology- and business-neutral.

AB - PurposeThe purpose of this paper is to present the identification-verification-confirmation of identity (IVCid) model that can be used to retroactively analyze the existing customer identification programs and devise new ones that can be used in face-to-face or non-face-to-face environment.Design/methodology/approachThis paper outlines the main elements of the customer due diligence (CDD) process and identifies those which may present a barrier to the customers. It then outlines the IVCid model. The model is used to analyze existing CDD approaches in physical presence, using reliable databases, biometrics and electronic signatures.FindingsThe IVCid model suggests that any customer identification program contains three elements: identification (collection of information), verification (checking the veracity of information) and confirmation of identity (linking the information to the individual). The accuracy of this model is confirmed by the analysis of the existing CDD procedures in some countries.Research limitations/implicationsThis paper looks at a limited number of practical cases of CDD implementation. Further research might be needed to assess the strengths and weaknesses of biometric-based or e-signature-based solutions. Research might be needed to establish links between the IVCid model and financial inclusion.Practical implicationsThe IVCid model allows for “modular” approach for the CDD procedures. It also underlines some risks associated with current CDD models.Social implicationsThe IVCid model can be used to devise the CDD procedures that more effectively contribute to financial inclusion.Originality/valueThis paper proposes the first universal model for the CDD procedures that works for both face-to-face and remote scenarios while also being technology- and business-neutral.

KW - AML/CFT

KW - Biometrics

KW - Customer due diligence

KW - Financial inclusion

KW - Model

KW - Verification of identity

KW - AML

KW - CFT

UR - http://www.scopus.com/inward/record.url?scp=85082314484&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/e953b5d8-5e39-3723-a17c-599523d183ab/

U2 - 10.1108/JMLC-01-2020-0007

DO - 10.1108/JMLC-01-2020-0007

M3 - Article

VL - 23

SP - 871

EP - 884

JO - Journal of Money Laundering Control

JF - Journal of Money Laundering Control

SN - 1368-5201

IS - 4

ER -