What Is the Customer Due Diligence Rule and Who Must Follow It? – Welcome to SIEMA KONSULTAN official website, your trusted consulting partner dedicated to helping you understand essential regulations in Indonesia’s business and financial sectors. For entrepreneurs, business owners, and finance professionals across Indonesia, this article will thoroughly explain the Customer Due Diligence (CDD) regulation—one of the key measures in preventing money laundering and terrorism financing. We invite customers nationwide to continue reading, as the information provided will be highly valuable to ensure your business complies with current legal requirements.

In the business and financial world, due diligence refers to the process of investigation and verification carried out to confirm the legitimacy and reliability of information related to potential clients, partners, or specific transactions. The main goal of due diligence is to minimize legal, financial, and reputational risks arising from illegal activities such as money laundering and terrorism financing.

In Indonesia, one of the crucial regulations governing due diligence is the Customer Due Diligence (CDD) rule, which must be followed by financial institutions, financial service companies, and other entities that could serve as channels for illegal funds entering the national financial system.

What Is Customer Due Diligence (CDD)?

Customer Due Diligence (CDD) is the process of identifying and verifying the identity and background of customers engaging in transactions or opening accounts at financial institutions or authorized companies. This process aims to prevent money laundering and terrorism financing, and it is part of legal obligations under Indonesian law.

Simply put, CDD is a step taken by companies to understand who their customers are, the source of their funds, and the purpose of their transactions. Through this process, companies can detect suspicious activities that may violate applicable laws and regulations.

Main Components of Customer Due Diligence

The CDD process typically involves several key steps, including:

1. Customer Identification
   Collecting identification data such as ID cards, Tax Identification Numbers (NPWP), and other official documents proving the customer’s identity.
2. Identity Verification
   Ensuring the authenticity of provided documents and data through direct checks or trusted digital systems.
3. Understanding the Customer (Know Your Customer/KYC)
   Gathering information about the customer’s background, business activities, source of funds, and transaction goals.
4. Transaction Monitoring
   Continuously overseeing account activities and transactions to identify suspicious patterns.
5. Data Storage
   Securely storing customer data and documents in accordance with data retention and confidentiality regulations.

Who Is Required to Perform Customer Due Diligence?

Regulations mandate CDD compliance for various entities and professions in the financial sector, including:

• Banks and Financial Institutions
  Including insurance companies, pension funds, and finance companies.
• Investment Management Firms
  Such as asset managers and securities companies.
• Remittance and Digital Payment Companies
  Money transfer and electronic payment service providers.
• Cryptocurrency and Fintech Companies
  Offering digital financial transaction services.
• Legal and Accounting Firms
  When involved in large transactions or high-risk clients.
• Other Entities with Potential Money Laundering Risks
  As regulated under Indonesian law.

In short, anyone interacting with the financial system and holding high reputational risks must comply with CDD regulations.

The Importance of Customer Due Diligence in Business

Implementing consistent and proper CDD offers numerous benefits, including:

• Reducing legal and sanctions risks
  By fulfilling legal obligations in preventing money laundering and terrorism financing.
• Enhancing customer and partner trust
  Demonstrating commitment to transparency and compliance.
• Protecting against financial losses from illegal activities
  Safeguarding assets and company reputation.

Additionally, CDD compliance helps the country combat economic crimes that harm society at large.

Customer Due Diligence is an essential step every entity interacting with Indonesia’s financial system must understand and implement. Properly applying CDD safeguards your business from legal risks, protects your reputation, and contributes to a healthier, transparent financial system free from illegal practices.

If you need assistance and consultation regarding due diligence implementation and other regulations, SIEMA KONSULTAN is ready to help. We are an experienced consulting firm located at Sampoerna Strategic Square South Tower Level 30, Jl. Jend. Sudirman Kav. 45, Jakarta 12930, Indonesia.

For a free consultation and more information, please contact us via phone/WhatsApp at 0813 1114 2228. Trust SIEMA KONSULTAN for your due diligence and compliance needs—your trusted partner in legal and regulatory compliance.

For more information

Please visit:

www.siemakonsultan.com

Jakarta Office:

Sampoerna Strategic Square

South Tower Level 30,

Jl.Jend.Sudirman Kav.45

Jakarta Selatan – DKI Jakarta

Bali Office: 

Jl. Cokroaminoto No.212,

Ubung, Denpasar Utara,

Bali – Indonesia

Contact Us:

Imam Budiharto
imam@siemakonsultan.com

Telpon: 021 2992 7844

Whatsapp: 0813 1114 2228