In the financial services industry, regulatory scrutiny is intensifying, particularly around how firms identify and manage risk during customer onboarding. For compliance, legal, and risk teams, the bar is higher than ever, especially when onboarding high-value individuals like ultra-high-net-worth (UHNW) clients, C-suite executives, and politically exposed persons (PEPs). This is where effective Customer Due Diligence (CDD) comes into play.
Customer due diligence has become the cornerstone of any effective Know Your Customer (KYC) and Anti-Money Laundering (AML) program. It’s essential for Anti-Bribery and Corruption (ABC), and Countering the Financing of Terrorism (CFT) as well.
When implemented correctly, customer due diligence not only satisfies regulators, it helps protect your institution from financial crime, reputational harm, and inefficiencies.
This guide breaks down the essentials of customer due diligence for financial institutions, with a focus on onboarding high-value clients. Explore the key steps for success, how enhanced due diligence (EDD) applies to higher-risk profiles, and how intelligence providers play a critical role in delivering accuracy, efficiency, and risk mitigation across the customer lifecycle.
Understanding what customer due diligence entails
Customer due diligence (CDD) is the process of identifying and verifying the identity of a client or beneficial owner and assessing their risk profile before entering a business relationship. It is a legal requirement under KYC and AML regulations in most jurisdictions—and a foundational control for detecting illicit financial activity.
Core objectives of customer due diligence include:
- Confirming customer identity and legitimacy
- Understanding the nature and purpose of the customer relationship
- Identifying beneficial owners and controlling interests
- Assessing the risk level of the customer (standard or high-risk)
- Monitoring ongoing activity to detect suspicious behavior
There are several levels of customer due diligence depending on the risk profile of the customer. Simplified due diligence is for low-risk clients and accounts, such as basic checking accounts. Standard due diligence applies to most clients; includes ID verification and understanding source of funds. Enhanced due diligence (EDD) is required for high-risk clients, including UHNWs, politically exposed persons, or individuals from high-risk jurisdictions.
Why customer due diligence is more complex with high-value individuals
For banks, wealth managers, and asset managers, high-value individuals often present a dual challenge. On the one hand, there is more business opportunity with larger assets and more complex financial needs. On the other hand, this comes with more compliance risk, due to exposure, wealth origin, and public profile.
These individuals typically warrant enhanced due diligence. This ensures meeting regulatory mandates and provides a full understanding of reputational, legal, and financial risks.
Common high-risk factors in financial services:
- Political exposure (PEP status)
- International transactions or offshore entities
- Sources of wealth that are opaque or difficult to trace
- Public controversies or past sanctions
- Connections to known bad actors or high-risk geographies
Even sophisticated institutions can struggle to maintain a complete and current picture of such individuals. That’s where comprehensive intelligence becomes essential.
Five steps to effective customer due diligence
Use this guide as a checklist to start off on the right track when onboarding high-value individuals.
1. Identity verification and risk classification
Start with a robust KYC process:
- Collect primary documents, such as government-issued ID, proof of address, tax IDs
- Verify beneficial ownership by identifying the natural persons who ultimately control the client or account
- Classify risk level by using internal scoring models to determine whether simplified, standard, or enhanced due diligence is required
Don’t rely solely on client-provided documentation. Independent verification, especially for UHNWs and executives is important.
2. Conduct enhanced due diligence where necessary
If a client is classified as high-risk, initiate enhanced due diligence (EDD):
- Understand the source of wealth and source of funds
- Review professional and financial background
- Assess media exposure, controversies, and affiliations
- Screen for sanctions, watchlists, and politically exposed status
This is where customer due diligence solutions become critical. Static data and generic databases often fall short for EDD, such as when you need information about a client’s personal network, business influence, or historical controversies.
3. Leverage relationship mapping solutions
Many high-value individuals operate within tight-knit professional networks. Identifying known associates, business partners, and board affiliations can reveal:
- Indirect exposure to sanctioned individuals or high-risk entities
- Hidden beneficial ownership structures
- Potential for conflicts of interest or undue influence
Altrata’s relationship intelligence capabilities surface these crucial connections, offering visibility into a client’s wider ecosystem. This can influence onboarding decisions and risk classification.
4. Keep due diligence on to monitor for changes
CDD doesn’t stop after onboarding. High-value clients can present evolving risks over time. Look for:
- Changes in political exposure
- New business dealings or affiliations
- Emerging reputational concerns
- Legal or regulatory actions
Real-time alerts and notifications on material developments like a new board appointment, acquisition, or investigation, are essential for keeping customer profiles current.
5. Document everything to be audit-proof
Finally, ensure that every element of your due diligence process is:
- Thoroughly documented
- Easily auditable
- Justifiable to regulators
For high-value individuals in particular, your documentation should show a clear rationale for onboarding decisions, risk classification, and any exceptions made.
Altrata’s Diligence Dossiers are designed to support this process, offering in-depth, reference-ready profiles that demonstrate the integrity of your compliance review.
For example, Altrata’s Enhanced Due Diligence (EDD) reports can be fully integrated into your compliance team’s workflows and trusted as a reliable resource for meeting AML, ABC, and CFT obligations. The reports align with the organization’s risk-based approach and are commonly used to assess high-risk individuals, including those across regions like the Middle East, Far East, and Eastern Europe. Their long-standing use also supports efficient ongoing monitoring, with periodic updates requested every 12 to 24 months.
Check out this case study about leveraging detailed dossiers and due diligence reports on the wealthy.
The cost of getting customer due diligence wrong
Failing to execute adequate due diligence, especially with high-value individuals, can expose your institution to serious consequences:
- Regulatory fines for KYC or AML non-compliance
- Reputational damage from media scrutiny
- Operational inefficiencies from onboarding delays or rework
- Loss of trust with clients, partners, and investors
In today’s regulatory environment, financial institutions are expected to know their customers and demonstrate that knowledge with accurate data.
Close the gaps in customer due diligence
Organizations operating in high-risk, high-value markets require more than off-the-shelf data to meet today’s compliance demands. Altrata provides a unique combination of deep intelligence on individuals across all tiers of wealth, helping financial services organizations proactively manage regulatory, reputational, and commercial risks.
Supported by a dedicated global research team, Altrata tools deliver a comprehensive view of an individual’s identity, financial background, source of wealth, and risk factors. Our analysts bring clarity where automation alone may fall short. This is especially helpful in assessing whether wealth has been accumulated legitimately, or if affiliations raise red flags that require further action. This human-led intelligence enables institutions to rely less on self-reported data, mitigating the blind spots that often accompany standardized compliance processes.
Avoid reputational damage with greater transparency
As regulations tighten and public scrutiny increases, institutions must think beyond baseline compliance. Reputational damage from a poorly vetted client can be more costly than a fine and more difficult (sometimes impossible) to repair. Understanding how wealth was acquired, not just how much there is, is central to risk prevention and ethical onboarding.
Altrata’s tools are designed to help organizations proactively address customer risk. The dossier incorporates critical elements of KYC, AML, and anti-bribery and corruption (ABC) frameworks, empowering compliance professionals to meet regulatory expectations while also maintaining internal standards of integrity and trust. Whether you’re onboarding a prospective UHNW client, a politically exposed executive, or a legacy donor, you’ll be equipped with the actionable insight needed to make the right moves.
Key layers of risk intelligence
How Altrata can support your compliance and onboarding process:
| Service Level | Coverage | Key Capabilities |
| Diligence Check | Preliminary research on an individual and their wealth | Demographic overview Suggested wealth tier classification PEP check Sanctions screening Adverse media check |
| Enhanced Due Diligence (EDD) | Deep-dive analysis on an individual | Full biography and net worth analysis Source of wealth narrative Tabular risk assessment Relationship mapping (associates, family) Adverse media |
| Standalone Corporate Due Diligence (CDD) | Due diligence analysis on a single entity | Corporate history and ownership Unique registry details Sector confirmation Shareholding and leadership information ESG risk indicators |
| Corporate Due Diligence | Analysis of an individual’s most relevant business affiliations | Summary of top 3 corporate connections Registry data and corporate structure Financial health indicators ESG and litigation risk profile |
What to look for in a customer due diligence partner
Traditional data sources provide a baseline for CDD, but they often lack the depth, accuracy, and context required for high-stakes onboarding. That’s where intelligence providers like Altrata offer a critical edge.
- Diligence dossiers: Comprehensive, structured profiles on high-value individuals. Think biographical data, professional history, wealth indicators, affiliations, controversies, etc. The dossiers act as a single source of truth to accelerate onboarding and risk review.
- Relationship intelligence: Visibility into a customer’s network of influence, helping you uncover known associates, hidden ties, and business entanglements that might otherwise go unnoticed.
- Alerts and notifications: Stay informed as your client’s risk profile evolves. Be the first to know when a PEP is appointed to a new post, when a company executive faces regulatory scrutiny, or when a UHNW individual divests from a controversial sector.
- Enhanced due diligence, delivered at scale: Whether reviewing one client or managing thousands of accounts, Altrata enables compliance teams to apply consistent, high-quality EDD that aligns with internal policy and global regulatory standards.
The strategic value of customer due diligence
For financial services firms, particularly those serving high-value individuals, customer due diligence is a strategic imperative. To meet regulatory expectations, mitigate reputational risk, and improve operational efficiency, institutions must move beyond fragmented databases and surface-level research. Acting on timely, accurate, and contextual intelligence across the customer lifecycle will ensure your organization’s success.
With Altrata, your compliance team will have the necessary data to:
- Onboard faster, with confidence
- Detect and prevent potential risks earlier
- Build defensible processes that stand up to audit scrutiny
- Protect institutional integrity in a complex, high-risk world
Our experts are here to help you uplevel your due diligence. Connect with the team whenever it’s convenient for you.